Why is an LPA important for business?
As one of the sponsors of the Leamington Business Awards, we’ve been asked to come up with some helpful advice for local businesses. Quite rightly, awards schemes are all about focusing on successes – what it is that makes your business shine. But as all business owners know, if you want the freedom to focus on doing great work, you need the right systems and support in place to underpin everything you do.
One area that business owners often overlook is the importance of having a Lasting Power of Attorney in place. While this may not be something which immediately excites you, it can make a critical difference to your business should you be unable to work.
Whilst there may be ‘an understanding’ amongst your colleagues of what would happen should illness or injury take you away from the business, in the eyes of the law this isn’t sufficient. Unless you have appointed an attorney, fundamental business operations may not be possible – access to bank accounts may be denied, suppliers won’t get paid, contracts could be compromised or lost, insurance premiums won’t be renewed, and salaries could go unpaid. The disruption to your company could be catastrophic, and it won’t take long for the impact to be felt.
A business or commercial Lasting Power of Attorney (LPA) is an important document to tackle this. You can use an LPA to appoint attorneys to deal with business matters and ensure business continuity in the event of your being unable to work. It is not possible for a director of a company to delegate their functions as a director through an LPA. Commercial LPAs are different to normal LPAs that deal with your personal finances and affairs (or health and welfare decisions) and represent a vital element of your business continuity planning.
The first step in preparing a business LPA is a review of the company’s articles of associations, and partnership or shareholder agreements. Some standard articles will say that the office of director is vacated if the director becomes of unsound mind.
Next, you will need to identify a suitable attorney. This should be someone you trust and who you know is capable of doing the job how you want it done, is familiar with the business, and who has a similar outlook and knowledge of the market and business as you.
Before your attorney accepts their role, ensure they fully understand the responsibilities.
In order for the LPA to be useable it must be registered by the Office of the Public Guardian (OPG). The OPG recently reviewed and reduced their fees for registering (LPAs) and the fees for all applications made after 1 April 2017 are:
- An application to register LPA – £82 (previously £110).
- A repeat application to register an LPA – £41 (previously £55).