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:
- 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.
- 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.
- 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.
- 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.
- 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.
