Entrepreneur or not, provision for the unexpected concerns us all. What happens when we ourselves are unable to act, when a sudden illness stops us working or an accident forces a longer stay in hospital and leaves us unresponsive?
Family members or parents are not automatically allowed to take decisions or act on behalf of an adult in full and permanently in such a situation. The same applies to spouses and registered civil partners.
What can have far reaching consequences in private life can bring serious problems for a company. If the entrepreneur is unavailable and can no longer perform certain roles, someone else has to. As soon as a person's private autonomous powers are involved, in other words as soon as we leave the realm of organisational structures, that is only possible if there is an authorised representative.
Legally binding representation by an authorised representative
An authorised representative represents a person in a legally binding way. Sole traders, general partners, limited partners, shareholders, stockholders and others therefore need an authorised person if they want their rights to be exercised and their obligations met should they be prevented from acting.
The right power of attorney sets out not only who is to represent you, but also how the authorised representative should act. That makes it possible to give the representative a framework for action or concrete instructions at the moment the power of attorney is granted. It ensures that this intent is expressed when the power of attorney is exercised.
Powers of attorney are adjusted when circumstances change
This is where it becomes clear why we do not speak of a single power of attorney or an entrepreneur's power of attorney. We address contingency management, because the frameworks and instructions given to the representative change over time. Adjusting the power of attorney when the circumstances in the company have changed is part of an entrepreneur's risk provision. That applies to every role a person holds. Where the focus a few years ago may have been on implementing a growth strategy tied to a significant investment volume, the objective today may be consolidation and a reduction of that investment volume. If the representative has no clear information about the objectives of the person granting the power, exercising it in line with the entrepreneur's wishes will not be possible.
With more complex company structures in particular, aligning all the legal frameworks with one another is indispensable. Unfortunately we see again and again that a majority shareholder of a limited company has appointed a representative, but the company's articles of association exclude the representation of a shareholder at the shareholders' meeting.
THE MAK'ED TEAM advises mid sized entrepreneurs on questions of contingency management. Together with our partner Jura Direkt GmbH, based in Nuremberg, legally sound powers of attorney are drawn up. THE MAK'ED TEAM develops the basis for structuring them together with the entrepreneurs and the entrepreneurial family, taking the constellation within the company or the group into account. Entrepreneurs can therefore determine how an authorised representative should act should they be prevented from acting themselves. That means not only that the wishes of the person granting the power are very likely to be carried out, but also that the family is given a structure within which it can act. In emotionally demanding phases of life that is a major advantage, for the family and for the company.
You can find further information on contingency and emergency management here.
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