The appointment of attorneys in relation to financial affairs is equally relevant to business assets as personal ones. If you’re a company director, partner or sole trader, it’s in your best interests to ensure that you’re protected, if for whatever reason you can’t make decisions. If this happens, you may not be able to form contracts, complete an undertaking already given or take action against a debt. Will not appointing an attorney put your business in a vulnerable position?
Have you ever thought what would happen if you or another director or partner is out of the country on business or holiday; are diagnosed with a medical condition which may physically or mentally incapacitate you; or if following an accident you become unable to make decisions. There have been recent incidents highlighted in the news where this has happened to relatively young people. Not the sort of people you may traditionally have thought needed a Lasting Power of Attorney, but we can all collide on a ski slope or fall off our bikes, which may result in temporary or long term incapacity of one sort or another. Such situations would leave your business exposed to risk.
To protect your interests, those of your company and your family, you could consider making a Lasting Power of Attorney for Property and Financial Affairs for your business. We recommend that all businesses should have Lasting Powers of Attorney in place. The alternative, if you lost capacity, would be to take steps to appoint a Deputy to deal with your affairs. This process can take several months and can be expensive. How will your business survive during those months with no one able to decide on your behalf?
A Lasting Power of Attorney for Property and Financial Affairs allows you to appoint someone you know and trust to make decisions for you when you’re unable to. Many businesses operate as sole traders or with one or two directors. If anything happens to one of these individuals, such as a road traffic accident, a serious sports injury, an operation that goes wrong, or they were in any other way incapacitated for a period of time this would seriously affect the running of the business. There is no automatic assumption that if there are two or more directors, these directors would automatically be able to continue running the company. In most instances the companies’ articles dictate how many directors are needed to make company decisions. If you do not have sufficient directors, then your company has a problem. We can help you consider your articles and how your company would manage if such a situation arose.
When it comes to paying bills, the majority of companies invoice on either a 14 or 28 day basis. If a director is unavailable for more than two weeks creditors would soon start to demand payments. If the director is unavailable for 28 days or is unable to sign cheques, on day 29 creditors would be considering what actions to take regarding the outstanding invoice.
If the company has to service a business loan or mortgage through a bank and a director is incapacitated for a period of time, the bank may consider whether to pursue recovery of their loan or outstanding mortgage. Equally, banks may consider freezing the company’s bank accounts, as one of the directors is no longer able to function or sign as a director.
In today’s climate many companies use personal assets as guarantees against business losses. This might be your house, other valuable assets, or in some instances even someone else’s house (with their permission). If your company went in to liquidation this may result in you losing not only your company but your house as well (or someone else’s house).
If you are concerned about any of the issues in this article or would like to speak to us about protecting your business, call us for a free no obligation chat.