Army Rumour Service

Register a free account today to become a member! Once signed in, you'll be able to participate on this site by adding your own topics and posts, as well as connect with other members through your own private inbox!

Appointing a director - succession planning

GDog

Old-Salt
Dad runs a private Ltd company as sole director and shareholder. Mum hasn't had to pay a bill since the 70s and never used a computer, my sister has taken on business responsibilities. There is no will or LPA. Dad is seriously ill with cancer. If he dies it will be intestate and my mum can barely sort out a gas bill, much less run a business.

Last week he lost cognitive abilities due to morphine, got locked out of several bank accounts and my sister was unable to perform urgent transactions needed to keep his business going. I managed to resolve it in hospital with the bank and dad sat next to me, which wasn't a fun two hours.

I'm trying to take action now to prevent more crisis in the future. I think the best thing to do is have my sister (or me) appointed as a director, but a Google search on doing this suggests it's convoluted and involves having service contracts etc.

Does anyone know how much of these processes are really needed for appointing a new director to a one man band type company? What would be sufficient for being able to operate bank accounts after he died - can he simply appoint the director by telling Companies House or will more paperwork be needed?
 

GDog

Old-Salt
Articles of Association for appointment in case it helps:

Screenshot_20200930-010543.png
 

GDog

Old-Salt
Lastly I should say his cognitive ability has improved markedly recently as a result of switching to Oxycodone instead of morphine.

He would now be in a fit state to sign documents, but this is complicated as most signatures need witnesses and he is an in-patient at a hospital with super-**** covid visiting rules. I've no idea what next week brings any more, it could be a discharge to home or death the way things have gone so far.
 

GDog

Old-Salt
And for any lurkers that see this thread and have kids, do them a favour. Write a will, grant them power of attorney and tell them what kind of funeral you want.

They don't need the extra stress of sorting this shit out in court on top of organising care or funerals.
 

GDog

Old-Salt
Enduring power of attorney, gives absolute control. Execute with lawyer in the room, as witness.

I've started with the LPA forms but there are problems:

His signature needs to be witnessed by a named person and the hospital staff are highly reluctant to do it. I get kicked out on the one hour covid visiting rule before any Dr is willing to observe it. They actively avoid it when I ask. (I'm sympathetic to medical staff in this predicament, why do they want to expose themselves to a court summons if someone disputes it in future)

Covid rules mean I can't get a second person/visitor in the ward with me to verify the signature. Including any lawyer etc.

The form also has to be certified by someone that can vouch for him not being under pressure etc. and again this is difficult in a hospital under covid restrictions.

Lastly I hear that the Office of the Public Guardian can take 9 weeks to process the form. This may turn out to be useless if he deteriorates or dies within this period.
 

GDog

Old-Salt
And to that end, if appointing a director is faster and/or easier than getting LPA (which also terminates if he dies) then I see that as being the better option right now.

I still want to get LPA and a will drawn up in the long term, if the grim reaper permits me the opportunity.

If there are simpler mechanisms to delegate control in the interim then I want to use them.
 
Provided you have the login details, you should be able to do it by just going to the companies house website and adding the details of a new director. I’m not sure without checking but you might have to fill in an online form or it could be as simple as inputting the details of the new director into the company information.

I’d suggest backing that up with getting your dad to sign a letter to hold on file that whoever it is has been appointed as a new director. That can then be produced in the future if you need to do so.

A probably more complex matter will be dealing with the bank. In the meantime, you can probably access the accounts by just using your dads login details but of course the whole point of the exercise is preparing for the time when you need to do so without your dads input.

You need to talk to the bank and get the new director added as an authorised person with their own login details to access the company accounts. This process will definitely involve filling in the appropriate forms and going through the process set out by the bank.

You will need either a signed letter by your dad as the existing director that the new director has been appointed and they might even need a shareholders resolution that the new director has been appointed.

That’s not as complicated as it sounds.

Just have a shareholders meeting at your dads bedside where he as the solitary shareholder appoints the new director. You might have to produce minutes of the meeting for the bank but again, that’s just a written copy of the proceedings that took place when the new director was appointed.

Who is the company secretary? That may be your dad as well under the existing arrangements but again, that can be sorted out at the “shareholders” meeting by appointing a new company secretary using the same process used for appointing a new director.

You can then again use the same process for notifying companies house about the appointment of a new company secretary as you did for a new director. There is a form specifically for a new secretaries appointment similar to the one for the appointment of a new director.

The information about the company officers including the current appointments of the directors and the secretary are available to view online simply by going to companies house website and following the online instructions for bringing up your company details on the screen.

The company accountant may be able to offer some advice and guidance. It’s probably worth having a chat with him/her anyway so that they are prepared to help sort out anything they need to do when they need to do it.

This advice is off the top of my head and I do know that companies house do change the rules and even often simplify the process from time to time.

I have my own Ltd company but one of my children is a director so I already have all the bases covered in terms of any future changes that might have to occur.

I wish you luck and hope this advice helps you to achieve what you need to do.
 
Last edited:

GDog

Old-Salt
Provided you have the login details, you should be able to do it by just going to the companies house website and adding the details of a new director. I’m not sure without checking but you might have to fill in an online form or it could be as simple as inputting the details of the new director into the company information.

I’d suggest backing that up with getting your dad to sign a letter to hold on file that whoever it is has been appointed as a new director. That then then be produced in the future if you need to do so.

A probably more complex matter will be dealing with the bank. In the meantime, you can probably access the accounts by just using your dads login details but of course the whole point of the exercise is preparing for the time when you need to do so without your dads input.

You need to talk to the bank and get the new director added as an authorised person with their own login details to access the company accounts. This process will definitely involve filling in the appropriate forms and going through the process set out by the bank.

You will need either a signed letter by your dad as the existing director that the new director has been appointed and they might even need a shareholders resolution that the new director has been appointed.

That’s not as complicated as it sounds.

Just have a shareholders meeting at your dads bedside where he as the solitary shareholder appoints the new director. You might have to produce minutes of the meeting for the bank but again, that’s just a written copy of the proceedings that took place when the new director was appointed.

Who is the company secretary? That may be your dad as well under the existing arrangements but again, that can be sorted out at the “shareholders” meeting by appointing a new company secretary Using the same process for appointing a new director.

You can also use the same process for notifying companies house about the appointment of a new company secretary as you do for a new director. There is a a form specifically for a new secretaries appointment similar to the one for the appointment of a new director.

The information about the company officers including the current appointments of the directors and the secretary are available to view online simply by going to companies house website and following the instructions for doing so.

The company accountant may be able to offer some advice and guidance. It’s probably worth having a chat with him/her anyway so that they are prepared to help sort out anything they need to do when they need to do it.

This advice is off the top of my head and I do know that companies house do Change the rules and even often simplify The process from time to time.

I have my own Ltd company but one of my children is a director so I already have all the bases covered in terms of any future changes that might have to occur.

I wish you luck and hope this advice helps you to achieve what you need to do.

We do have CH login details IIRC but even if not I could currently get them from dad in his current state.

The company secretary is also my father (as I said, one man band type company).

After the harrowing two hour call to clear security with a morphine addled account holder I asked about how to avoid it in future and was told by the bank either LPA or change in mandate was needed.

Change of mandate is more straightforward as it just needs signatures and ID rather than witnesses, so I'm doing that to deal with banking.

The processes of holding shareholder meetings etc is the sort of thing I see advised elsewhere for larger companies but I find difficult to translate to a single person company. I don't really know what evidence is needed or would be asked for.
 

Tyk

LE
The processes of holding shareholder meetings etc is the sort of thing I see advised elsewhere for larger companies but I find difficult to translate to a single person company. I don't really know what evidence is needed or would be asked for.

It's nowhere near as intimidating as it sounds. It's irrelevant the size of the company the basic format is the same. You can even term it an extraordinary general meeting (EGM) where all shareholders are present.

The minutes of the meeting don't need to be in any legalese, just a clear record of what's discussed and decided with a date/time and attendees, namely your Dad. Nothing fancy, it's purely functional.
There's no formal format, straight forward paragraphs or even bullet points and that a vote of all shareholders was taken and the decision approved.

Since there's one shareholder it's trivial.
Example:-
Fred/Wilma proposed as Director - Approved by shareholder
Fred/Wilma proposed as Secretary - Approved by shareholder

The meeting minutes are kept in the business records, in the case of my company at the accountants and in a filing cabinet in my office. They don't have to be on paper, but there's no harm in keeping one.

If memory serves (and it probably doesn't as I haven't done this in an absolute age) you inform Companies House of the appointment of company officers and the date of the meeting where they were appointed as minuted. The Companies House site will more than likely hold your hand on that bit as they made a concerted effort to use straight forward English.
 
Holding a shareholders meeting sounds like a bit of a grand event.

Large multinationals will hire facilities to cater for hundreds of people and put a lot of effort into various preparations to run the thing on the day.

Or if you need to sort something out to meet your own legal obligations, take the slightly more simplistic approach.

Bear in mind most of what you are doing is running a business on a day to day basis but occasionally where there needs to be a more formal record, it’s not a big deal.

In my instance, I sit down with my son in the kitchen and we have a 5 minute natter about something and we’ve had a directors board meeting.

Or the accountant emails the yearly accounts to me and while we are traveling somewhere in the car, I say to my son, have a quick look at them before I sign them and send them back and we’ve just done the AGM.

For us, it is just whatever is convenient and we can keep it very simple.

Just write up a short note and stick it in the filing cabinet that’s it. All perfectly legal and meets the requirements.
 
And to that end, if appointing a director is faster and/or easier than getting LPA (which also terminates if he dies) then I see that as being the better option right now.

I still want to get LPA and a will drawn up in the long term, if the grim reaper permits me the opportunity.

If there are simpler mechanisms to delegate control in the interim then I want to use them.
I think you need to look beyond the immediate need to run the company and think about what happens after your father dies. Is the business a going concern that can operate without your father? Does it have assets (tangible or intangible) that could be liquidated if the company is wound up or would have a value in a sale?

If the company has a value, I think you should look at the shareholding. As your father is intestate, his shareholding will be distributed between your mother and siblings along with his other assets according to the applicable laws. But it will take time; it took us nearly a year to get Probate in my father’s estate, in which time whatever small value left in his business had evaporated. It would have been far easier if ownership had been transferred before he died.

If the company has no realisable value as a going concern or through the sale of assets, wind it up now. You’ll save yourself a whole heap of angst down track.
 
And for any lurkers that see this thread and have kids, do them a favour. Write a will, grant them power of attorney and tell them what kind of funeral you want.

They don't need the extra stress of sorting this shit out in court on top of organising care or funerals.
Amen to that. If your parents are still alive get LPA sorted, and do the same for yourselves. See the ' Alzheimers, a right bastard ' thread .
 
Am watching with interest as Dad did this to us and left us with a complicated Will to sort out, and I run a small business!
So cut to the basics as already covered, and don't get bogged down in Legalese corporate bollox.
Have the lawyer and accountant very close at hand so LPAs for both Dad and Mum are executed asap. Your right it's a bugger when the shit is hitting the fan.
Make sure what Dividends and cash your M&D are entitled to is taken from the company account and put into your Mums account as your Dads - if he has an sole account will be frozen for probate.
The operational running of the business is a separate issue, could you care take it - What does it do?
In the meantime very best wishes and buy a bottle of Brandy for yourself from petty cash.
 

9.414

Old-Salt
Go and see your lawyer this day. Get them to sort out a will and a LPA. Although the hospital may not permit visits to covid secure areas, lawyers are now witnessing documents using skype/zoom etc. The govt and law society (I assume you are in England, but other UK jurisdictions are similar) issued guidance earlier this year:

As already explained, company law can be very simple - we are not all running ICI or M&S! As a single director he will not need to have a Company Secretary. Formal records are merely a piece of paper where you record a decision. Directors do not need to have service contracts in your type of company - you are not a plc. Your duties are here:

As a company director and sole shareholder of a few companies I keep it very simple. On the up side, when as Managing Director you propose to the shareholders that the Directors remuneration and benefits package is increased, or the distribution of annual profits should be to the shareholders as a dividend on the shares they hold I have never heard a murmur of disapproval from the b**gers ;)
... P.S. this is also a perfectly lawful and sane giving yourself a good talking to.

Your time to enjoy the humour of the running of a company I have set out above will come to you when you have more time after sorting it out. Right now you need to get your fathers will and affairs in order.
 

4(T)

LE
You may be too late to save the company.


A very serious obstacle to an LPoA is that the hospital may refuse permission for the LPoA to be signed until the "donor" is deemed "capable" through an adult social services assessment. If the donor has lost cognitive ability through dementia or medication, then he/she may be deemed "incapable" and thus no LPoA.

LPoAs also become void upon the death of the donor.
Back to square one, etc.

All Ltd company resolutions and appointments may also be considered null and void if the "vote" included anyone who was medically "incapable". Thus the company may be frozen in place.


I wonder if a potential third route might be to appoint administrators? Although this normally occurs when a company ceases operating, I think that there are legal grounds where administrators can take over an entity in the absence of its directors. Administrators could at least keep a viable company running by paying the bills, etc.
 

FrosteeMARIA

LE
Gallery Guru
Without being presumptious, I do hope your dad makes a recovery. This may be useful for future reference (there's a LOT to read on here) about what to expect in terms of help that SHOULD be made available to you.
I wish I had known about some of this stuff sooner, things might have turned out different. Also had experience of death in the family with no will, etc. Needless to say, I haven't spoken to my family as a result since 2012.


 
You may be too late to save the company.


A very serious obstacle to an LPoA is that the hospital may refuse permission for the LPoA to be signed until the "donor" is deemed "capable" through an adult social services assessment. If the donor has lost cognitive ability through dementia or medication, then he/she may be deemed "incapable" and thus no LPoA.

LPoAs also become void upon the death of the donor. Back to square one, etc.

All Ltd company resolutions and appointments may also be considered null and void if the "vote" included anyone who was medically "incapable". Thus the company may be frozen in place.


I wonder if a potential third route might be to appoint administrators? Although this normally occurs when a company ceases operating, I think that there are legal grounds where administrators can take over an entity in the absence of its directors. Administrators could at least keep a viable company running by paying the bills, etc.
To me, the key question is whether the company is worth saving or not. If it’s a typical personal services company that has nothing to offer other than the father’s expertise, just wind it up at the lowest administrative cost. If that can’t be done because the father isn’t competent, just leave it. Don’t pay any bills, don’t try to manage anything. The OP has no legal duty to the company and no liability for its debts.

If it’s a going concern with assets, both tangible and intangible, it’s a much harder problem. I think you’re idea of appointing Administrator is the right approach.
 

GDog

Old-Salt
The company is concerned with property development/construction, with my dad essentially acting as a project manager. At present he's lucid enough to organise it and the cashflow with my sister after a change in drugs.

Assets are likely to be cash, I don't believe there's any land held etc.

I am wary about winding the company up. He did this with a previous company years ago after his own father died and ended up being held personally liable for about £10k for an NHBC guarantee related to some window defects.

This became a protracted court case involving an appeal, but my understanding is that if the company wasn't wound up than my dad wouldn't have been personally liable.

Although he has solicitors for work I don't really know who it is or which to engage for personal affairs. My sister is reluctant to make dad feel worse about his predicament by forcing the issue of wills etc onto him now whereas I would rather get this sorted whilst I still have a chance.
 
Enduring power of attorney, gives absolute control. Execute with lawyer in the room, as witness.

He’s none cognitive, which may be an issue.

The OP should also look into the court of protection who can act in the absence of an LPA.

This could also be of some help.


Id recommend reading up what you can then seeing a solicitor. If the company has an accountant speak to them first.
 

Latest Threads

Top