Business LPAs for Company Directors: What Happens to Your Company If You Lose Capacity? (England & Wales)

Guides › Written and last reviewed by the Downloadawill Will Team on 31 October 2026. Applies to England & Wales.

If a controlling director of a limited Company loses mental capacity, nobody can automatically step into their shoes. Their family can't, their co-director can't, their accountant can't, and a personal Lasting Power of Attorney often doesn't solve the problem either. A Business LPA lets someone who understands the Company use the director's shareholder rights and keep that business running.

This guide covers England and Wales. Scotland and Northern Ireland have their own systems.

One motorway, one meeting, one phone call

Picture a typical, successful small Company. Ten years ago two friends, James and Rob, set up a limited Company together. They each own 50% of the shares and they're the only two directors. Both are married with families.

They play to their strengths. James wins the clients, handles the money and drives the growth. Rob runs the workshop, the logistics and the delivery. Neither could run the Company the way it runs now without the other.

For months they've been trying to get in front of the buyer at a very large business. A contract with them could change the Company's future. Finally the meeting is booked.

James is running late. On the motorway, in a hurry, he's involved in a serious accident. He survives, but he has a severe head injury. The doctors say he has lost mental capacity and may never get it back.

Rob's world has just been turned upside down. So has the Company's. What happens next depends almost entirely on paperwork James did, or didn't, sign years earlier.

First, why the Company can't simply carry on

It's easy to assume that the Company will just keep going, and that James's wife Sarah will deal with "his side". The law doesn't work like that, for three reasons.

The Company is a separate legal entity. The money in the business bank account belongs to the Company, not to James. No one acting for James personally can sign Company cheques or move Company money because of his illness.

James wears two hats: director and shareholder. As a director, he helps run the Company. As a shareholder, he owns half of it and votes on the big decisions, such as appointing directors. An attorney can never act as a director in someone else's place. A director's job is personal. But an attorney can use a shareholder's rights, including voting their shares, if the LPA allows it.

The Company's rules may now work against it. What happens depends on the Company's articles of association (its rule book) and any shareholders' agreement. Many small Companies use the standard "model articles". Under those:

• The usual quorum for directors' decisions is two. With one director unable to act, Rob on his own can mostly only appoint another director or call a shareholders' meeting.
• James can stop being a director altogether once a doctor treating him writes to the Company saying he's mentally incapable of acting as a director and may stay that way for more than three months.
• Appointing a new director by shareholder vote needs more than 50% of the votes. Rob has exactly 50%. He can't outvote half the Company on his own.

Add a business bank mandate that needs both directors to sign, perhaps a loan with personal guarantees from both directors, and a big new client watching closely. Now look at the four ways this story can go.

Scenario 1: James has no LPA at all

This is the worst case, and the most common.

Nobody has legal authority to vote James's shares. Not Sarah, not Rob, not the Company's accountant. Being married gives Sarah no rights over James's shares or his money.

To get that authority, Sarah (or someone else) would have to apply to the Court of Protection to be appointed James's deputy. That means forms, medical evidence, court fees, often legal fees, and then ongoing supervision, an annual fee and an insurance bond once a deputy is appointed. It commonly takes many months. Even then, the court decides who the deputy is and what they can do, and a deputy must report on their decisions every year.

Meanwhile, at the Company:

• Rob can keep the lights on, but only just. He can't make most board decisions alone, and anything needing shareholder approval is blocked.
• If the bank mandate needs two signatures, paying suppliers, wages and HMRC can become a crisis within weeks.
• The relationship with the big new client is in limbo. Large buyers check their suppliers carefully. A Company where one of two owners is in hospital, and nobody can vote half the shares, looks like a risk.
• At home, Sarah may have lost James's salary overnight, with nobody able to deal with his personal finances or his share of the Company either.

Two families, and every employee, are now waiting on a court.

Scenario 2: James has a personal LPA, with Sarah as his attorney

James did the sensible thing for his family. He made a Property and Financial Affairs LPA, appointing Sarah, and he didn't exclude his business interests. So Sarah can deal with his bank accounts, pay the mortgage and, in principle, vote his 50% of the Company.

That's far better than nothing. But think about what it really means.

Sarah knows almost nothing about the business. She's never seen the accounts, doesn't know the clients and has never met the bank manager. Yet she's now the only person who can vote half the Company. Every shareholder decision Rob needs, from appointing a new director to approving borrowing or agreeing the terms of the big new contract, needs her vote.

And she's being asked to make those decisions at the worst moment of her life, while visiting James in hospital and looking after their children.

There's a harder truth too. As attorney, Sarah's legal duty is to act in James's best interests, not the Company's. Those can pull in different directions. The family may badly need money now, through dividends, a sale of the shares, or winding up the Company. The Company may need every penny kept in the business to deliver the new contract. Sarah may feel she has to say no to Rob, or feel pressured to say yes. Either way, a ten-year friendship and a successful business can be lost in a matter of months.

Rob, meanwhile, is effectively in business with someone he never chose as a partner.

Scenario 3: James has a personal LPA, with his solicitor as attorney

Some people appoint a professional, such as a solicitor, to avoid putting a burden on their family. On the plus side, a solicitor understands the legal duties of an attorney and won't be overwhelmed by the paperwork.

But a solicitor appointed to deal with all of James's affairs still doesn't know his business. They don't know the clients, the margins, the staff or why this one contract matters so much. They'll need to be briefed on everything, and they'll quite rightly be cautious, because they're answerable for every decision.

Professional attorneys also charge for their time, and the fees come out of James's money. Every meeting, every phone call with Rob and every shareholder resolution adds to the bill. And they work office hours, on their own timetable, while Rob is trying to keep not only the deal, but possibly the Company alive.

Sarah may also find herself having to ask a professional for money from her own husband's accounts to run the home.

The solicitor will do things properly. But "properly" and "quickly enough to save the contract" aren't always the same thing.

Scenario 4: James has both a personal LPA and a Business LPA

Now rewind. Years earlier, James and Rob sat down and each made two LPAs.

• A personal Property and Financial Affairs LPA, appointing their wives, covering everything except their business interests.
• A Business LPA, a separate Property and Financial Affairs LPA limited to their shares and other business interests, each appointing the other (with a trusted replacement, such as the Company's accountant, in case both are affected).

After the accident, once the LPAs are in use:

• Sarah takes care of James's personal money and their home. She doesn't have to make a single business decision.
• Rob, as James's business attorney, can vote James's shares alongside his own. Between them that's 100% of the votes, so he can quickly appoint a new director, such as a senior manager, to make up the board.
• The board can make decisions again. With a second director in place, the bank mandate can be updated and the Company can keep paying its staff and suppliers.
• Rob can go back to the big client and show them a Company that's still in control of its own future.

There's no court application, no months of deadlock, and nobody is forced to make business decisions they're not equipped to make.

Two directors, but one set of interests to protect

A co-director acting as attorney has a potential conflict of interest. Rob must use James's shares in James's best interests, not his own. He can't, for example, use them to vote himself a bigger salary or to buy James's shares cheaply.

This is where good drafting matters. The Business LPA can include instructions such as:

• keep Sarah, as the personal attorney, informed of major decisions
• any sale of James's shares must be at an independent valuation, and agreed with Sarah
• act consistently with the shareholders' agreement

A replacement or second attorney, such as the Company's accountant, can add a further safeguard. Getting this balance right is something we go through with every client.

The four scenarios side by side

What makes a good Business LPA

A Business LPA uses the same official Property and Financial Affairs form as a personal one. What makes it a Business LPA is the way it's written. The key points are:

• Make two LPAs, and make them fit together. Your personal LPA should exclude your business interests and your Business LPA should cover only them, so the two attorneys never trip over each other.
• Choose the right business attorney. Usually a co-director or a trusted senior colleague: someone who knows the business and whom you'd trust with your share of it.
• Name a replacement. Directors often travel together. If both are in the same accident, who steps in?
• Add clear instructions. Protect your family's interests, especially around selling your shares or changing your rights.
• Check your Company's paperwork. Your articles and any shareholders' agreement should allow an attorney to vote your shares, and should say what happens if a director can no longer act. Your Company's legal adviser or accountant can check this.
• Both directors should do it. In our story it was James. It could just as easily have been Rob. A Business LPA only protects the Company if every director who matters has one.

Do it now, while you can

An LPA can only be made while you have mental capacity. James couldn't have made one from his hospital bed. Once capacity has gone, it's too late, and the only route left is the Court of Protection.

It also takes time to register an LPA with the Office of the Public Guardian. In our experience it takes at least 12 weeks, and longer if a form is sent back for a mistake (see our guide to why LPAs get rejected). An LPA can't be used until it's registered, so the time to make one is long before you need it.

Many directors have a shareholders' agreement, insurance and a business plan, but nothing that says who can vote their shares if they're lying in a hospital bed. It takes very little time to fix that.

Frequently asked questions

Can my attorney act as a director of my Company in my place?

No. Being a director is a personal role and can't be handed to an attorney. What your attorney can do is use your rights as a shareholder, including voting to appoint a new director. Some Companies' articles also allow a director to appoint an "alternate director" while they're well, which is worth asking your Company's adviser about.

Can I have more than one Property and Financial Affairs LPA?

Yes. You can make a personal LPA and a separate Business LPA, each with different attorneys. They need to be drafted carefully so that it's clear which LPA covers which assets. Each LPA has its own £92 registration fee from the Office of the Public Guardian.

I'm the only director and shareholder. Do I still need a Business LPA?

Arguably even more. If you lose capacity, your Company may have nobody at all who can make decisions or appoint a new director, and your staff, clients and suppliers would all be waiting. A Business LPA lets someone you trust appoint a director and keep the Company going, or wind it down properly.

My spouse knows the business well. Do I still need two LPAs?

Not always. If your spouse genuinely understands the business and your co-director is happy with that, a single, well-drafted LPA may work. But it's a decision to make deliberately, not by default, and it's worth talking through with your co-director.

Does a Health and Welfare LPA help my business?

No. A Health and Welfare LPA covers your care and medical treatment. It's just as important to have one, but it gives no power over money, property or shares. Our guide to Property & Financial Affairs vs Health & Welfare LPAs explains the difference.

Does a sole trader or partner need a Business LPA?

The same problem arises, in a different form. A sole trader's business assets are their own, so a personal LPA may cover them, but you may still want someone who understands the business to run it. Partners should also check their partnership agreement. Talk to us about your situation.

The short version: protect the business as well as the family

In our story, the accident was the same in all four scenarios. The outcome wasn't. Without an LPA, a successful Company and two families were left waiting on a court. With only a personal LPA, a grieving spouse or a professional who didn't know the business held half the Company's future in their hands. With a personal LPA and a Business LPA, the family was looked after, the Company kept running and the contract was still there to be won.

Every LPA we prepare is checked by our Will Team and comes with your own personalised Signing Guide, showing everyone exactly where and in what order to sign. Find out more about Lasting Powers of Attorney, or contact us to talk through Business LPAs for you and your co-directors. We never sell or pass on your details.

About this guide

This guide was written and checked by the Downloadawill Will Team. It explains the law in general terms and isn't legal advice for your own situation; what happens in your Company also depends on its articles of association and any shareholders' agreement. The story is an illustration, not a real case. Downloadawill is a trading style of Direct Wills. All our Will Writers are Members of The Society of Will Writers. We've been writing Wills and Lasting Powers of Attorney for people in England and Wales since 1997. Read more about us.