If you run a successful business then you must have been through teething problems and come out the other side. Perhaps this is now the time to relax and sit back enjoying the rewards of your many years of hard work.
If all that hard work was in jeopardy you would do anything you could to prevent any threat from affecting your business. What if that threat was you?
With recent changes in legislation and case law it is now almost impossible to remove a company director who has lost mental capacity.
To remove them based upon an impairment would breach discrimination laws and even the courts are reluctant to fall foul of this legislation. This could lead to a Director in a position of authority making decisions and accessing company accounts without the remaining Directors being able to do anything about it.
The damage that could be done to a company does not bear thinking about and there is suggestion by legal experts is that this could lead to an influx of cases through the courts by Shareholders suing Directors who have not taken their responsibilities to the Company seriously.
Every Director owes a Duty of Care to the Company and to their shareholders to ensure the smooth running and to do all that is within his power to prevent his actions from being detrimental. If the ability to remove that Director is now curtailed by the Equality and Discrimination legislation then what can be to protect the business?
The answer is simple, each Director should prepare a Business LPA which is a personal document authorising someone they trust to act on their behalf and step into their shoes should they be in a position where they no longer have capacity to carry out their duties. There are various occasions when the Business LPA would be useful. The loss of capacity due to mental illness is of course major concern but there could be a short term illness or injury which affected capacity as well as perhaps trips abroad which could require someone to deal with matters in their place.
Given the potential risk to Directors and their families from being sued by co-Directors and Shareholders for having not made sufficient provision it is now vital that everyone who runs a business has an LPA dealing specifically with their business affairs.
Quite often although the legislation covers specifically Company Directors should a case come before the courts concerning either a sole trader or a partnership then the courts are likely to apply the same principles.
Our trained Consultants can assist you in determining the potential risk to your business and advising on the requirements under the new legislation to protect your interests and your business.
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