Minimising the impact of incapacity on your business and family


Business owners in West Berkshire are urged to consider what would happen to their business in the event of an unexpected illness or accident.

The temporary or permanent incapacity of an owner or director can have a devastating effect on a small business. It is likely to lead to failure to pay suppliers, deliver customer goods or services, compliance with regulatory requirements and reputational damage to the business. This could result in financial difficulties for the business owner and their family.

Businesses that have only one active director and majority shareholder, and sole traders, are particularly adversely affected by incapacity. In that situation, there may be nobody with power to appoint another director or access bank accounts. In the case of partnerships, death or incapacity might result in liquidation of the partnership.

Penny Wright, a solicitor with Gardner Leader, suggests 3 steps to help prepare and reduce the impact of incapacity on your business.

Commercial Lasting Powers of Attorney (LPA)

A commercial LPA (also known as a business LPA) allows a business owner to appoint a trusted friend, relative or colleague who would be authorised to take over their functions, in the event of physical or mental incapacity.

An LPA is a document that a person signs whilst capable, appointing one or more people who would have authority to make decisions on your behalf, in the event of future incapacity.

Commercial LPAs are usually separate from personal LPAs, and restricted to dealing with business matters. It is also important to make LPAs dealing with personal property & financial affairs; and personal health and welfare matters; but it is often the case that different people are chosen to act as attorneys for business rather than personal affairs.

Attorneys must always act in the best interests of the person who made the LPA, and they are accountable for their actions.

Review constitutional documents

Ensure that the documents governing your business (which might be a partnership agreement, or in the case of a company, articles of association and shareholders’ agreement) reflect what you want to happen in the event of incapacity or death. Giving appropriate pre-emption rights for business partners or co-shareholders can help to ensure business continuity.


Avoid potential conflict by discussing all the issues with family and business partners in advance. A practical business continuity plan will help keep the business running in the absence of a key person, whether temporary or permanent.

Gardner Leader’s team of specialist solicitors can help with these issues, as well as a wide range of legal services for businesses, individuals and charities.

Penny Wright

Inheritance Protection
Charity Law

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