Whether you are an entrepreneur or not – the topic of retirement planning affects us all. What happens if we are unable to act ourselves – if we are unable to work due to a sudden illness or an accident forces us to stay in hospital for a longer period of time and we are unavailable?
Family members or parents may not automatically make full and permanent decisions or act on behalf of adults in a precautionary or emergency situation. The same applies to spouses and registered partners.
What can have far-reaching consequences in the private sphere can cause serious problems for a company. If the entrepreneur is absent and can no longer perform certain roles, someone else has to do so. As soon as a person’s private autonomous powers are involved, i.e. we are not mentally within organizational structures, this is only possible if there is an authorized representative.
Legally binding representation by an authorized representative
An authorized representative represents a person in a legally binding manner. This means that sole proprietors, general partners, limited partners, partners, shareholders, etc. need an authorized person if they want their rights to be exercised and their obligations to be fulfilled if they are unable to do so.
The right power of attorney not only determines who should represent you, but also how the authorized person should act. This makes it possible to give an authorized representative a framework for action or specific instructions for action when granting the power of attorney. This ensures that this will is declared when the power of attorney is exercised.
Powers of attorney are adapted when general conditions change
At this point, it becomes clear why we are not talking about a health care proxy or an entrepreneurial proxy. We address care management because the respective scope of action and instructions to the authorized representative change over time. For example, it is part of an entrepreneur’s risk provision to adapt the power of attorney if the framework conditions in his company have changed. This applies to all roles that a person takes on. If the focus a few years ago was on implementing a growth strategy involving a significant investment volume, the objective today may be consolidation and involve reducing the investment volume. If the authorized representative does not have clear information about the objectives of the principal, it will not be possible to exercise the power of attorney in accordance with the entrepreneur’s wishes.
Coordination of all legal framework conditions is essential, particularly in the case of complex corporate structures. Unfortunately, we see time and again that, for example, a majority shareholder of a limited liability company has appointed an authorized representative, but the articles of association do not provide for this.
THE MAK’ED TEAM advises small and medium-sized companies on issues relating to pension management. Together with our partner Jura Direkt GmbH, based in Nuremberg, we draw up legally compliant powers of attorney. THE MAK’ED TEAM draws up the basis for the design of the powers of attorney with entrepreneurs and the entrepreneurial family, taking into account the constellation in the company or group of companies. This allows entrepreneurs and companies to determine how to act if they are prevented from doing so by an authorized representative. This not only ensures that the wishes of the principal are implemented with a high degree of probability, but also provides the family with a structure within which they can act. This is a great advantage in emotionally stressful phases of life – for the family and for the company.
