Protecting Your Business

If you run a business it is critical that you plan for what will happen to the business, not just on your death but in the event that you become incapable of the day-to-day running.

Making sure your business runs smoothly

Many people are aware of property and finance Lasting Powers of Attorneys. These documents allow someone, chosen by you, to manage the finances and property if you can’t manage them yourself. For example, you may be abroad, in hospital following an accident or have lost mental capacity through a stroke.

If you are a business owner, particularly in a small business or a sole trader, it is vital to have someone who can run the business for you, even if only on a temporary basis, if you become unable to do so.

Many people appoint a family member to be an attorney to deal with their property and finances. However, a family member may not be the most suitable person to manage business interests. For this reason we would recommend that a second Lasting Power of Attorney is put in place that relates solely to business interests and which can, for example, appoint a fellow director or business partner. Each Lasting Power of Attorney clearly sets out the matters on which the attorney can act and ensures the smooth running of the business.

Without a Lasting Power of Attorney in place, if you lose capacity, someone will have to apply to the Court of Protection for an order to manage your business. This may not be the individual that you would have chosen. In addition, the application process is expensive and lengthy. Whilst the application is being made the company’s asses may be frozen, causing losses to the business.

Passing on your business to others when you die

If you leave your business interests to someone in your Will, you may expect that they will automatically be received by your chosen beneficiary. However, this is not necessarily the case.


If you are in a partnership it is important to look at any partnership agreement to ensure it does not prevent you from transferring your interests in the business.

Private Limited Company

If your business interests are shares in a Private Limited Company the Articles of Association may prevent the full benefits of the shares being passed to your chosen beneficiary. (The Articles of Association of a company determine how the company is run and the rights of the shareholders).

Most companies adopt either a Table A or Model Articles. If your company has adopted Model Articles, and these have not been modified, the shares will pass to your beneficiaries but the directors can refuse to register them as owners of the shares. The directors do not have to give a reason for refusing to register the shares. If this situation arises your beneficiaries will have no voting rights or say in the way the company is run; the other directors could elect not to pay a dividend and therefore your beneficiaries would receive no income from the shares either.

There are many different versions of company articles and it is vital that they are reviewed to ensure your wishes can be carried out.


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How we can help

We have commercial and private client solicitors who can advise on your individual circumstances and if necessary what changes might need to be made to ensure your business can run smoothly and pass to your chosen beneficiaries in the way you wish.

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