Company and Business Succession Planning

While most ensure they have properly prepared Wills, Powers of Attorney and Enduring Guardianships in place, little thought is given to consequences where the owner/manager of a business is unable to run the business as a consequence of incapacity or death.

There are some basic issues which should be addressed:

  1.  Alternate directors should be appointed who may stand in for directors who cannot attend meetings.  The alternate director could be a spouse, the executor you have appointed in your Will or maybe some close business associate.
  2. A company should appoint an Attorney under Power of Attorney to sign documents on behalf of the company.  The Attorney can be restricted to defined activities.
  3. A properly drawn Will should include the power being given to the executor for a partner or sole trader to conduct the business until it is able to be sold.
  4. Consideration should be given to “key-man” insurance to cover the cost of having to engage others to run the company in the absence of the principal/managing director due to death or other incapacity.
  5. Consideration should be given to drafting shareholder or partnership agreements where provision is made for the other partners or shareholders to acquire the interests of the shareholder/partner who has been incapacitated or has died.  There are several variations and possibilities in such agreements.
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