26 Jun 2017
Author: Stephen Breen
Directors risk their business by having no Shareholder Agreement, Will, or Lasting Power of Attorney in place.
You’ve done the hard work, put in the hours and now you have a flourishing business. Everything is in place, isn’t it?
A recent survey found that more than half of the UK’s small business owners have no Will, Lasting Power of Attorney, or arrangements in place regarding shares, leaving their business at risk should they die or become incapacitated.
Insurer, Legal & General, surveyed more than 800 small and medium-sized businesses for their annual ‘State of Nation’s SME’ report. Of those surveyed, only 21% said that they thought that their beneficiaries would inherit and become active in the business. So what happens to the other 79%?
Your death or incapacity as a business owner or shareholder will have a huge impact on your company’s ability to function. If you have no plan in place regarding what happens if you die or become incapacitated, then your business is likely to fail.
If you own a business an essential part of your Business Continuity Plan is to have a Financial Lasting Power of Attorney (LPA) in place. Illness or injury can strike at any time without warning. Having an LPA in place will allow you to predetermine who, should you be unable to do so, will have access to your business bank accounts, who can sign contracts, etc. This will ensure wages are paid, contracts are honoured and the business can tick over until you are able to return to the helm.
If you do not have a valid Will in place, then your business or shares may go to a beneficiary who has neither aptitude nor interest in your business. Good news for your competitors: bad news for your business.
Your business is your baby. You have nurtured it, watched it grow, and sent it out into the world protected by insurance for theft, fire, and flood. But, you haven’t insured it for the loss of You. Why put it at risk? A few hours spent planning for a worst case scenario – creating a simple Shareholder Protection agreement; Lasting Power of Attorney; and will – will protect your business for generations to come.
Why leave it to chance?