Who will run your business when you can’t?

At the end of February 2013, the Mental Health (Discrimination) Act (“the Act”) became law.  The purpose of the Act was to contribute to removing the stigma associated with mental illness.  The Act repeals three laws which previously prevented people with experience of  mental health problems continuing to hold public office.

The most important of these changes and which affect limited companies, is that the Act has amended the Company (Model Articles) Regulations 2008 (“the Model Articles”).  This means a Company Director can no longer be removed from office because of mental health illness.  This could have a significant impact, particularly on smaller companies who have only one or two Directors, if one Company officer was no longer able to participate in Company business due to a lack of mental capacity.

There is a way, however, which can address the unforeseen problem of a sole trader, partner or Company Director losing mental capacity and no longer being in a position to act as a Company officer.  This involves the Director making a Lasting Power of Attorney for Business.  Attorneys are people who you choose to make decisions for you in the event you are no longer able to make them yourself.


Attorneys do not need specialist knowledge or training but they should be people who you trust, often a husband or wife  Alternatively, Attorneys can be relevantly qualified professionals like a fellow Director, Accountant or Solicitor.  If the Company is regulated by a professional body, for example, the Financial Conduct Authority, to enable the Attorney to operate within that profession he or she must also be a member of that relevant professional body.

In the event the Donor of the Lasting Power loses mental capacity, the Attorney or Attorneys are granted the authority to make decisions on behalf of the Donor in matters relating to business.  The Donor can give unlimited or restricted authority to act, depending on the Donor’s wishes.

Lasting Powers of Attorney were created under the Mental Capacity Act 2005.  Once made they have to be registered at the Office of the Public Guardian.  The process of making and registering a Lasting Power of Attorney takes approximately 3 months.

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