Business Lasting Powers of Attorney – Why Your Business Needs One

The benefits of having in place Lasting Powers of Attorney (LPA) documents for one’s personal affairs are now more widely known than was previously the case. Recent statistics that show the significant increase in applications for the registration of LPAs with the Office of the Public Guardian (OPG), the department of the Court system that is tasked with the processing of LPA applications, evidence this.

There are, of course, two types of LPA documents, namely the Property & Financial Decisions LPA and the Health & Care Decisions LPA. Applications to the OPG for the registration of both types of LPAs increased from about 691,746 in 2020/21 to over 1.3 million in 2024/25.

Benefits of LPAs

The benefits of having LPAs in place cannot be overstated. LPAs enable nominated and trusted third parties, legally known as ‘Attorneys’, to make decisions on behalf of the ‘Donor’, i.e. the person making the nomination, if the Donor is, for any reason, unable to make decisions for themselves. The Donor’s inability to make decisions may be compromised owing to ill health, mental incapacity, accident or other reasons.

Some of the advantages of the creation of Personal LPAs include:

1. Peace of Mind: Entrusting one’s affairs to those handpicked or nominated by you provides security for you and your family.
2. Avoiding Court Delays & Costs: Without a LPA, loved ones, who often encounter stress and unrest in these circumstances, must apply to the Court of Protection, which is a lengthy and expensive process, in order to make decisions on your behalf.
3. Insurance for Vulnerable Times: LPAs ensure that your finances and care are seamlessly managed in the event of an accident, illness, or the onset of conditions such as dementia that may affect one’s ability to handle their own affairs.
4. Choice & Retention of Control: By preparing LPAs, you decide who makes decisions for you and how, rather than Court-appointed individuals that may be unknown to you making decisions on your behalf.

What is a Business Lasting Power of Attorney (LPA)?

For various reasons, however, including lack of public awareness and limited media focus, the take-up of Business LPAs has, however, failed to match the growth in popularity of personal LPAs.

Business LPAs are vital for business continuity and enable business leaders to ensure that decisions can be made if, for any reason, they become unable to make decisions for themselves owing to injury, ill health etc.

Although Business LPAs would usually be registered with the OPG as soon as they have been prepared, they would only normally be used if the business owner lacks capacity or if the business owner, whilst with capacity, expressly authorises their Attorney(s) to make decisions on their behalf.

Benefits of Business LPAs

In addition to enabling business continuity, which ensures that key decisions are made in the absence of the business owner, other benefits of Business LPAs include:

1. Retaining Control over Decision-Making: Business owners can nominate who runs the business, thus avoiding Court intervention to appoint a deputy, which can be a time-consuming and expensive process.
2. Financial & Legal Protection: Safeguards company assets, maintains cash flow, and ensures that contractual obligations are met.
3. Reputation Management: Protects the business's reputation by ensuring smooth, uninterrupted service to clients and suppliers.
4. Versatility: Can be tailored to specific needs, covering, for example, voting rights for shares or specific operational tasks.

Issues That Can Arise Without Business LPAs

The practical implications for a business that is paralysed where there is no Business LPA in place are seismic. Examples include:

1. Viability of the Business: Decisions, including signing of contracts, purchase of stock that may or may not be of a time-sensitive nature, cannot be made thus impacting the business’ viability.
2. Bank and Financial Accounts: Where accounts are managed by a sole signatory or where the authentication of financial accounts vests with the business owner, the business may be unable to access these.
3. Paying Staff & Suppliers: Where business accounts are frozen or inaccessible, the business may be unable to fulfil contractual obligations and pay its staff. This may result in breaches of contractual obligations and other problems.
4. Tax Obligations: The business may become unable to meet its tax obligations which can result in penalties and interest arising on unpaid tax liability or, potentially, the subject of a winding petition from HMRC.
5. Disputes: A leadership vacuum may result in conflicts and disagreements amongst family members or others that are involved in the business.
6. Closure of the Business: Paralysis in decision-making, inability to access funds and other adverse outcomes may result in the eventual closure of the business.

Conclusion

The myriad consequences that may result from the absence of a Business LPA are seismic and certainly not worth the risk for business owners.

Where Business LPAs are contemplated, as these are bespoke documents that are tailored to the needs of each business owner and business, it is important that legal advice is sought to ensure that the documents provide adequate protection in the case of unexpected eventualities. The legal process will involve the review of Partnership Agreements, Articles of Association or any other business-related governing or constitution documents as it is essential that these are taken into consideration during the drafting process.

If you are a business owner wishing to discuss Business LPAs, please contact Leathes Prior on 01603 610911 or info@leathesprior.co.uk for bespoke advice and guidance on Business LPAs and associated matters.