Important components involved with protecting your stake in a business

Estimated read time 4 min read

When it comes to protecting your stake in a business, you need to think of every outcome possible, to keep you and your business interests protected. You don’t know what the future holds, so it is always critical to make plans to keep your interests and business stakes protected. To do this, you need to make sure you have all the information you need to make these decisions. 

Here are some of the components you should be thinking about when wanting to protect your stake in a business.

Know your rights

Like with most things in business, you need to know your rights. This is especially important when looking at protecting your stakes in businesses. This can help you make decisions regarding your involvement with the company.

Know your rights

As a shareholder of a private limited company, your main rights include:

  • Getting important information and documents, like annual reports and accounts.
  • Look and inspect the various business registers that the business keep, like the register of directors.
  • And to see a copy of the company’s articles of association and memorandum.

Depending on the shareholder’s agreement, you may have additional rights within the business, which should also be looked at and should be used, so you know what is going on in the company.

Lasting Power of Attorney

One thing to consider when wanting to protect your stakes in a business is looking at the Lasting Power of Attorney (LPA).  By doing so, if you were to lose mental capacity, and you were unable to make decisions, temporarily or permanently, it will bring your business partners, family members, and yourself comfort knowing that there is somebody in place to make decisions on your behalf. 

For this, you’d need an LPA in respect of your property & financial affairs, as this covers all of your financial decisions, including operating your bank account(s), managing your investments, and the selling and/or purchasing of property.

The appointment can also cover your business interests and can allow someone to act in your place as a shareholder. Depending on your needs, you can appoint more than one person to be your Attorney to make different financial decisions, and they can have different degrees of authority, to protect your business interests. Speaking to a solicitor that specialises in LPA, like Black Norman Solicitors, is always a good option, so you can have the facts laid out for you. 

Keep records of all business transactions

Whether it’s a hard copy or digital version, it is always a good idea to have a record of all your business transactions and businesses you have a stake in. Along with your point of contact at said business, along with any other critical information you may have. It is also worth telling someone you trust where they can find this information if it’s ever needed. This will give you peace of mind that you know where you’re investing and what stake you hold and where they are. This can also help you if you have an LPA as all the information will be in one place as well, which can help whoever you appoint go through with your wishes.

Keep records of all business transactions

When it comes to keeping your business interests in mind, it’s always best to do what you can to protect them. Spending some time looking at your rights and keeping an accurate account of your records can help you protect your business interests. Setting up an LPA can also give you this protection as well, as it can give you peace of mind that your interests are being taken care of you if you are unable to do so yourself.

Sarah Cantley

Editorial Head at UK Blog for Business & Startup.

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