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Corporate Lasting Power of Attorney


One in six people will have time off for stress-related illnesses or serious health conditions during their working lives. We are now in a generation where more people are working past the age of 65 and for this age group the proportion of people having time off for these reasons increases to one in four.

Where you are a director in a company, have you considered what will happen with the business if you were to become unable to carry out your day to day duties? This could be short term, for example if you were signed off work due to stress or it could be more long term, for example if you were diagnosed with a degenerative illness whereby you started to lose mental capacity.

From 2013 the law changed meaning that you can no longer remove a director by Court Order due to Mental Health, regardless of whether your Articles on Association say that you can. The law now protects that person. In order to remove a director due to Mental Health issues a registered practitioner who is treating the person must give a written opinion to the company stating that the person has become mentally or physically incapable of acting as a director. This method of removing a director is particularly difficult because doctors would need to breach data protection to give that written opinion and may therefore choose not to provide one.

You may think you can rely on family, friends, or even employees, to take over the running of the business for you but this really isn’t a satisfactory long-term solution. It is particularly important to consider what would happen because if the bank realizes that one of the directors/signatories lacks capacity, they are fully entitled to freeze the business bank accounts and call all loans in. This would result in you being unable to pay bills or salaries, receive payments and potentially have to find a significant amount of money to pay off any loans.

A simple solution to this problem would be to have a Corporate Lasting Power of Attorney drawn up to allow you to nominate someone to be able to make decisions on your behalf relating to the business. Not only will this save time, it will help ensure that everything runs smoothly in your absence.

If you decide to make a Corporate LPA in respect of your business affairs, the Attorney should have an understanding of the how the company works, although it will ultimately be up to you who you decide to appoint. Your attorney will not be taking over the company, they will simply be signing and making decisions on your behalf.

It is important to remember that even if you choose to appoint an Attorney, the shareholders may choose to remove you as director and therefore the Attorney appointment would come to an end. This could be for any reasons in your Articles of Association, with the exception of Mental Health due to the changes in law.

You can choose more than one Attorney who could act jointly or separately from each other. Whoever you choose will acquire your fiduciary duties and responsibility and will be treated as if they are the director as they will be acting on your behalf.

When determining whether to have a Corporate LPA drawn up it is important to check the Articles of Association to ensure that delegation powers are included. If your Articles do not include them then it will be necessary to hold a directors meeting and vote the powers in. The Articles can then be amended.

A Corporate LPA must be registered with the Office of the Public Guardian, regardless of your mental capacity in order for it to be valid. Once that’s done, then you will have peace of mind that should anything happen to you, your Attorney can act on your behalf.

In 2013 the law changed relating to the cost of LPAs and whereas personal LPAs are charged to the individual client, for businesses LPAs are now tax deductible.


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