As Indian investors continue to view the UK as a location for their business to grow and prosper, they should also consider whether and how putting in place a Business Lasting Power of Attorney (BLPA) may help to protect their interests.
A BLPA allows the person making it (the "donor") to appoint another person (the " attorney") to make decisions concerning their business interests, either when they are unavailable or lack mental capacity. (A BLPA should be distinguished from a property and financial affairs LPA created to manage an individual’s personal finances.).
It is vital for business owners to plan, and part of this is considering what would happen to their business if they were unable to make decisions. This might happen, for example, as a result of being abroad on holiday or for business, having an accident, or developing a medical condition that affected their mental capacity
In such circumstances, who would be able to act on behalf of the business owner or shareholder in order for the business to continue, as It cannot be assumed that a family member or a business colleague would have authority to make such decisions on behalf of a business owner or shareholder.
In the absence of valid authority for someone to act on their behalf, where a business owner has lost capacity, an application to the Court of Protection may be required for the appointment of a deputy to do so. This may take 6 months or longer, during which the continued operation of the business may be at risk.
To protect the interests of their business, business owners, whether sole traders, partners or directors, should consider making a BLPA. Doing so will enable them to appoint as their attorney someone they trust, who understands their business, and is able to make decisions in line with their knowledge of the business owner's approach and likely wishes.
Before making a BLPA, the prospective donor should check that the business does not already have provisions dealing with the absence or incapacity of a business owner or shareholder. However, in many cases, a BLPA will be the best way to protect the business. It is important to note a BLPA only allows for shareholder's decisions to be taken by a prospective attorney, such as changing the name of the company, changing the share capital or rights of shares, raising funds, etc.
If you have any questions about BLPAs, or business succession or estate planning generally, please contact Liz Palmer or Raavi Sangha and we would be happy to assist.