The Business Owner LPA: The Succession Document Your Accountant Forgot

If you own or run a company and you lose capacity tomorrow, three things happen. You'll be surprised how quickly.

• Your bank will freeze signing rights on the business account the moment they know.
• Your co-directors will find themselves running a company one director short, with no quorum for board decisions if you were part of the count.
• Your spouse, usually the attorney on your personal Financial LPA, will suddenly be the person the bank, the accountant, your suppliers, and your co-directors call. To sign contracts. To approve payroll. To authorise a bank transfer. To make decisions about a business they may not know intimately, at speed, under stress.

That is not what your spouse signed up for. It is not what your business needs. And it is not what most solicitors offer as standard.

The fix is a Business Owner LPA: a second Financial LPA, made under the same statutory framework as your personal one, but scope-restricted to your business role and appointing different attorneys, a co-director, a senior colleague, a business partner, someone who knows the company. Business continuity insurance in legal form.

Most law firms don't sell it. We do.

Why one LPA isn't enough

A Lasting Power of Attorney for finance and property (LP1F) is broad by default. Your attorneys can do anything with your money and property that you could do yourself, subject to specified restrictions and to the general duty to act in your best interests.

That breadth is what makes the personal LP1F so useful, pay bills, run the household, sell the house if you have to move. It is also what makes it a bad fit for your business.

Your spouse under your personal LP1F could theoretically sign a supplier contract on your company's behalf if you're a sole director-shareholder. In practice:

• Your co-directors won't recognise them. A shareholders' agreement or the company's articles will usually restrict who can vote your shares, and rarely contemplate an attorney doing it.
• Your bank won't recognise them for business accounts. Business banking mandates run through the company; the personal LPA doesn't touch them without a specific board resolution.
• The commercial decisions are wrong to hand to them. They might be perfectly capable people, but running a business they don't know, at speed, in your absence, is unfair, and it's not what they thought they were signing up to when they said yes to your personal LPA.
• HMRC and the Companies House filing calendar don't wait. Someone has to sign the accounts, respond to VAT enquiries, deal with a director's loan account, decide whether to approve a proposed dividend.

The clean answer is a second LPA, with a narrower scope and different attorneys. The Mental Capacity Act 2005 doesn't limit you to one LPA. You can have as many financial LPAs as you like, each restricted to a defined area of your affairs.

What a Business Owner LPA actually is

A Business Owner LPA is:

• Form LP1F, the same statutory form as your personal financial LPA. There is no separate "business LPA" form. What makes it a Business Owner LPA is what you write in Section 7.
• Scope-restricted in Section 7, the section of the form headed "Preferences and instructions". This is where we insert a Bonsai template that appoints your attorneys "in relation solely to my role as director/shareholder/member/partner of [Company Name] (company number [X])" and specifies the decisions they can and can't make.
• Different attorneys from your personal LPA, a co-director, business partner, senior colleague. Someone who understands the company and can act quickly on commercial questions.
• Registered with the OPG separately, as its own LPA. Its own £82 fee. Its own registration timeline (8-10 weeks).

Section 7 is where these fail at OPG review. The OPG will reject an LPA if the instructions and preferences are unclear, self-contradictory, or purport to grant powers outside the scope of an LPA. Free-text drafting in Section 7 is where solicitors go wrong. We use a Bonsai-authored template that has been drafted to survive OPG review and populated from the questionnaire, no blank fields, no free-text roulette.

The Section 7 scope statement

The Bonsai template covers:

• Company identification, full name, registered number, your role (director / shareholder / member / partner / sole trader / LLP member).
• Attorney authority, decisions this LPA covers.
• Reserved matters, decisions this LPA does not cover, which stay with your personal attorneys or (for regulated decisions) with the company itself.
• Coordination clause, how this LPA sits alongside your personal LP1F, so there's no accidental overlap or contradictory instruction.
• Consultation duty, a requirement that your business attorneys consult with your co-directors or the company's professional advisers before major decisions, where practicable.
• Duration clause, the LPA operates for as long as your role subsists; it does not survive your ceasing to be a director/shareholder/member.

Every one of these turns on facts you tell us in the questionnaire. The template resolves the placeholders before the LPA is generated. No unresolved brackets ever reach the OPG.

Articles, shareholders' agreement, board consent

Even a perfectly drafted Business Owner LPA can be defeated by the company's own paperwork.

Articles of association. Your company's articles may restrict what an attorney can do, for example, requiring board consent before an attorney exercises voting rights, or triggering pre-emption if a shareholder loses capacity. If the articles are silent, the default is often that the attorney can vote the shares, but articles are frequently not silent.

Shareholders' agreement. More restrictive still. It may contain a "compulsory transfer on incapacity" clause that requires you to sell your shares back to the other shareholders on incapacity at a formula price. If it does, your Business Owner LPA is drafting into a jurisdiction that no longer has your shares in it. That doesn't necessarily mean the LPA is useless, it may still be the right tool for banking, contracts, or a director's loan account, but it materially changes the picture, and you need to know before you register it.

Board resolutions. Some banks will refuse to recognise an attorney on a business account without a board resolution authorising the attorney's signature. Some suppliers will require the same for high-value contracts. We can draft the resolution as part of the instruction and give it to you to circulate to your co-directors.

As part of every Business Owner LPA instruction, we:

• Review your articles and any shareholders' agreement.
• Flag any conflict or compulsory-transfer clause.
• Advise on amendments to the articles or shareholders' agreement to make the LPA workable in practice, where necessary.
• Draft any board resolution required to bring the LPA into operational effect at the bank or with key suppliers.

This is not optional. It is the point.

Attorney choice

The choice of attorneys under a Business Owner LPA is different from your personal LPA. Some rules of thumb:

• Someone who knows the company. A co-director, a senior employee with signing history, a fellow shareholder. Not your spouse (they're your personal attorney), and not a friend from outside the business who won't understand what they're signing.
• Someone who can act quickly. Jointly and severally by default, with replacement attorneys, same reasoning as any LP1F.
• Someone whose interests broadly align with yours. A co-director who owns 50% of the same shares has aligned interests. A rival for your job might not.
• Not the same person as your certificate provider on this LPA. The certificate provider signs the s.10 certificate confirming you understand the LPA and no one has pressured you. They can't be an attorney, a family member, a business partner in the specific sense the OPG defines it, or someone who works with an attorney. This shrinks the pool. We check.

What "in addition to" means

A Business Owner LPA is in addition to your personal LP1F, not instead. If you only have a Business Owner LPA and something happens, no one can pay your household bills. If you only have a personal LP1F and something happens, no one can sign your company's contracts. You want both.

Most business owner clients take three:

• Personal LP1F, spouse (jointly and severally with a child as replacement).
• Personal LP1H, spouse and/or child, with Section 5 walked through properly.
• Business Owner LP1F, co-director / senior colleague, scope-restricted to the company.

This is why we offer a Full Set tier at a discounted combined fee. It's the sensible package for anyone running a business and it happens to be the one most solicitors have never mentioned to their business-owner clients.

The alternatives, Deputyship, and why you don't want it

If you lose capacity without a Business Owner LPA in place, your family has to apply to the Court of Protection for a Deputyship covering your business affairs. Two problems:

• Time. A Deputyship application takes 6-12 months to be granted, sometimes longer. Your business does not have 6-12 months.
• Powers. A Deputy has narrower powers than an attorney under an LPA. They may need to return to court for specific authority to make significant decisions. Ongoing supervision by the Office of the Public Guardian carries an annual fee. And crucially, the Court will not appoint a Deputy whose sole role is running the company if there's a viable alternative, for many business-owner clients, that means the Deputy is appointed only for financial administration, and the business decisions default to your co-directors or fall into limbo.

An LPA made while you have capacity gives you: your choice of attorney, immediate effect on registration, a defined scope, no ongoing supervision fee, and a document that survives the moment your family would otherwise be running around looking for solicitors.

Cost

Bonsai's fee for a Business Owner LPA is a fixed price, quoted at the start. It includes:

• Drafting from the OPG template using our Section 7 scope statement.
• Solicitor sign-off.
• Articles and shareholders' agreement review.
• Draft board resolution where needed.
• Notification letters (LP3) where you name people entitled to be told.
• OPG registration submission (or the papers ready for you to send yourself).
• Coordination with your personal LPAs to avoid overlap.
• Storage in the Bonsai Law vault.

The OPG registration fee (£82) is separate. Fee remission may apply, the questionnaire tells you if it does.

What to do next

If you own or run a company and you don't have a Business Owner LPA, you have a live business-continuity risk. The paperwork takes half an hour of your time and about ten weeks of OPG processing. Do it while it's boring paperwork.

[Start a Business Owner LPA →] or [Book a 15-minute call →].

Related reading on this site: - Our LPA service, all three products → - Shareholders' agreements, the private rulebook → - LPA vs Advance Decision, the difference nobody explains →

Sources: - Mental Capacity Act 2005, Schedules 1 and 4 (LPA framework) (legislation.gov.uk) - LP1F form and LP12 guide (gov.uk) - Office of the Public Guardian, LPA scope guidance - Court of Protection, Deputyship applications

This post is marketing material and general information. It is not legal advice. Speak to a solicitor before making a Lasting Power of Attorney or any related instrument.