Running a business involves making many important decisions on a daily basis as well as various legal contracts to sign to ensure day-to-day affairs run smoothly. Whilst we hope that we’d be able to run our business with no problems, we may sometimes need to consider what to do should the unthinkable occur. Creating a power of attorney allows you to appoint other people (attorneys) to act on behalf of the business where the director cannot. Read our article below to find out more about this legal documentation and how it can help your business in times of crisis. Contact us today if you have any questions or would like to find out more about how it works.

What is a business power of attorney?

You may have heard of a power of attorney when it comes to personal family matters, but this contract can extend to a corporate level as well. A corporate lasting power of attorney (LPA) is the formal appointment of a person who will have the authorisation to perform the following tasks, should the owner become mentally incapacitated, seriously ill or is unavailable to carry out their duties:

  • Attending meetings outside of the company, acting as a representative of the business.
  • Attending shareholder meetings on behalf of the director.
  • Sign contracts on behalf of the business.
  • Act on behalf of the director.

If you need to sign documents at a lawyer’s office, you will need to bring documentation with you to prove that you have the authorisation to act on behalf of the director. The person who has been granted corporate power of attorney is the only one who can sign legal documents for the business.

Why is it important to have a business power of attorney?

Having a lasting power of attorney for businesses is essential, no matter how big or small the company is. Running a business involves several important factors that may need the authorisation of the head of the company in order to be carried out, such as paying staff wages and salaries or paying creditors. The lasting power of attorney is excellent for crisis planning to ensure the business can run smoothly and ensure others are available to sign important legal documents, should something happen to the director or they become mentally incapacitated. The signing of contracts can happen at any time, so it’s always ideal to have other people who can be available to do so. Some other reasons to consider this document include:

  • If the director were to become unwell in any capacity, it is a difficult and long-winded process to remove them from the seat. To do this, an application to the Court of Protection will need to be submitted to allow someone to be appointed as a financial deputy. Unfortunately, this can take up to a year to obtain an order which leaves your business vulnerable during this time.
  • If the company doesn’t have someone at the helm, this leaves the business open to a number of consequences; bank accounts may be frozen, creditors or suppliers may not be paid, staff may not be paid and contracts that are signed may no longer be valid. This could end with business failure.
  • If your business is a regulated organisation, licenses to trade may be revoked by professional bodies.
  • There may be a history of family illness that increases risk, therefore appointing others to act on behalf of the company is a necessary move.
  • Companies may refuse to work or trade with a business that has no leader.

Continuing to trade when there isn’t a leader in place could cause significant problems for the business and employees. We always recommend putting a power of attorney in place so that the company and its employees don’t suffer the effects of a leaderless organisation.

How do I create a business power of attorney?

When creating this legal document, you must first decide on who is authorised to act on behalf of the company and what responsibilities they have as a result. It is vital to choose someone you trust and who knows how the company is run – you may decide to appoint an employee of the company and a family member, for example, who will be able to work together. The process works as follows:

  1. When you talk to a solicitor, they will ask you who you would like to give power of attorney and how you want the company to be run.
  2. Once you have told us everything you want to be included in the LPA, we will draft one for you. At this point, you may want to consider personal LPAs as well.
  3. Once you are happy with the LPA, it will need to be witnessed and signed by yourself and the assigned attorneys.

The process is very simple and straightforward and offers a resolution should the owner of the company become unable to make decisions or sign important legal documents.

Need advice on business power of attorney?

Corporate power of attorney is crucial for a business so that there is a solution in place for your business to continue running if you are in ill health. If you need advice or would like further information on the business power of attorney and how to create one for your company, contact us today and our expert team will be happy to help. Alternatively, you can browse through our services to find out more about how we can help you.