4th Nov 2021

Business Lasting Powers of Attorney

A Business Lasting Power of Attorney (BLPA) is a document which enables you to appoint someone or people you trust (known as your Attorneys) to make decisions concerning your business either when you are unavailable, for example, if you were travelling abroad for a substantial amount of time, incapacitated by an accident or if you lost mental capacity and became unable to make these decisions yourself.

We would usually recommend that you prepare two separate LPA’s, one dealing with your personal property and finances and one dealing with your business affairs. This is because it is often likely to be the case that the person or people who you wish to appoint to deal with your personal finances is/are not the most appropriate people to deal with your business affairs, perhaps because they may not have the necessary knowledge or expertise or because they cannot be appointed to deal with your business interests because they are prevented from doing so, for example, because of legislation.  Having two separate LPA’s can also help to avoid confusion.

 

Do you need a BLPA?

The following people may require a BLPA:

  • Sole Traders
  • People who are self-employed
  • Company Directors (where what happens in the event of the incapacity of a Director is not dealt with in the Company Articles)
  • A Partner in a Partnership (where what happens in the event of a Partner’s incapacity is not dealt with in the Articles of the Partnership)
  • Sole Traders
  • People who are self-employed
  • Company Directors (where what happens in the event of the incapacity of a Director is not dealt with in the Company Articles)
  • A Partner in a Partnership (where what happens in the event of a Partner’s incapacity is not dealt with in the Articles of the Partnership)

 

Why are BLPA’s important?

Unless you had a valid Enduring or Lasting Power of Attorney or provision made for such an eventuality within your company documentation, no-one would be able to step in and make financial or business decisions on your behalf if you lost mental capacity. Banks may freeze your business accounts leading to difficulties with paying suppliers or servicing debts. It may not be possible for new contracts to be signed and insurance may be invalidated. There may also be statutory or regulatory breaches, particularly if you are a Partner or Director,

In this situation, an application to the Court of Protection is likely to be required for the appointment of a Deputy to manage your property and financial affairs. Court of Protection applications are notoriously lengthy (they are currently taking six months, if not longer, on average), and it is not always the case that the Court will choose the person or people you would have chosen to make decisions concerning your business.

During the months it can take for a Deputy to be appointed, there may be no-one who can legally pay wages or suppliers or loans or who is able to sign contracts, sell assets or shares or to make time critical decisions which could affect the future operation of your business. It goes without saying that any one or all of these situations could leave your business in jeopardy.

Having a BLPA in place means that if you became unable to make decisions about your business because you do not have mental capacity, your Attorneys could sign contracts, access money in your accounts, authorise loans and make business decisions on your behalf. There would be a safety net and it would give you reassurance that the business you have worked hard to create would continue without you. Further, insurance companies may look more favourably on a business where contingency measures are in place in the event of a crisis.

 

Example

Derek is a sole business owner. Sadly, he is involved in an accident and suffers a traumatic brain injury. He does not have an LPA or a BLPA in place. His bank freezes his business account which means he is unable to pay his employees or suppliers. New work stops coming in as his customers go elsewhere.

The only option available to his family is to apply to the Court of Protection for a Deputy to be appointed, but it is unlikely that this application will be granted in time to save his business.

If he had an LPA or BLPA in place, the situation would have been different as his chosen Attorneys would have been able to access his bank accounts and make the necessary payments.

 

How do you make them and how long does it take?

You can make a business LPA in the same way you would make a personal LPA, either online through the gov.uk portal (and then printing and signing) or by printing, completing and then executing the document. Once signed, the document will need to be registered with the Office of the Public Guardian before it can be used. It is currently taking the OPG about five months to complete the registration process.

 

Why use a professional?

  • A professional can ensure that the remit of the BLPA is clearly set out to avoid confusion and conflict with other LPA’s you may have made and/or with Partnership Agreements/Company Articles
  • A professional can discuss your requirements and include clauses that you may not have thought about
  • As well as ensuring that a BLPA is appropriate for your situation, a professional can consider the existing provisions within your business to see whether further protection is necessary. In the event of a challenge, a professional will have retained file notes which could be adduced as evidence
  • A professional can ensure that the remit of the BLPA is clearly set out to avoid confusion and conflict with other LPA’s you may have made and/or with Partnership Agreements/Company Articles
  • A professional can discuss your requirements and include clauses that you may not have thought about
  • As well as ensuring that a BLPA is appropriate for your situation, a professional can consider the existing provisions within your business to see whether further protection is necessary. In the event of a challenge, a professional will have retained file notes which could be adduced as evidence


Our charges

Start from £750 plus VAT. As BLPA are a business document, the cost may be tax deductible.

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