Power of attorney for your business
If you run a business, what would happen if you became ill and unable to sign a contract or authorise a bank transfer?
Being out of action for a temporary period is clearly less problematic than permanent incapacity. However, how long could your business cope? Particularly with any uncertainty as to when you may recover?
You can include provisions in your articles of association or partnership agreement, and set up third-party arrangements to overcome many situations, but there will be some issues that can only be delegated by power of attorney. Note, also, that authority as a director of a company cannot generally be delegated by a power of attorney.
A power of attorney is the only way of authorising someone else to sign for you and make decisions on your behalf in relation to financial matters should you become mentally incapable of this yourself. If you have not made a power of attorney and become mentally incapable, the only means by which someone can manage your financial affairs is by applying to the Court of Protection for a Deputyship Order – an expensive, time-consuming and frustrating process.
You may make a power of attorney for your personal finances – to cover your home, savings and investments. You may choose to make a separate power, appointing different attorneys, for your business affairs.
While you can include preferences (non-binding guidance) and instructions (restrictions and limitations) for your attorneys, you should think carefully before doing so, as this can create irreversible difficulties later on. The Office of the Public Guardian (OPG) – the body that oversees the registration of powers of attorney – has also traditionally rejected preferences and instructions thatit felt were inappropriate.
This has conflicted with the wishes of those running a business who did not want their attorneys to have carte blanche; they wanted to impose limits on when and how their attorneys could act.
The OPG sought recently to reject many such provisions included by a businessman in his power of attorney. However, the Court has ruled that these provisions (running to seven pages!) were all acceptable and the OPG had gone beyond its authority in rejecting these.
This is helpful in reaffirming an individual’s right to make a power of attorney on their own terms. These extensive provisions will cause a hindrance if the power is needed one day. The Court stated that the provisions made the power ‘a lot less useful’ – but the client knows that, and he made a carefully considered decision to include these because that is what he wanted.
A version of this article appeared in Business East on 4 August 2015.
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