How managing directors can make provisions for emergencies - Ensuring capacity to act with a power of attorney

If an entrepreneur is no longer able to do business due to a serious accident or sudden illness, they cannot simply be represented by their spouse. If a representative has not been appointed in good time and given power of attorney, the company will be left without a manager, which in the worst case could mean ruin.

In addition, appropriate instructions can be included in the power of attorney to ensure that the business is conducted in accordance with your own wishes. Due to the far-reaching powers, there should be absolute trust between the entrepreneur and the authorized representative. It is also advisable to prepare an emergency kit that provides authorized representatives with all important plans, copies of important documents and instructions on where to store the originals at a glance.

Settling transactions after death

Entrepreneurs should define early on in a representation plan who will represent them in an emergency and which tasks are to be assumed. To ensure that the representative has all the necessary powers, it is advisable to draw up a general power of attorney for the entrepreneur, which remains valid even in the event of death. It is important that the power of attorney clearly names the entrepreneur as the principal as well as the authorized representative and their powers. If the entrepreneur is also the managing director of a GmbH, it should be noted that a managing director cannot grant a general power of attorney because his or her responsibility for the company cannot be transferred. In this case, the power of attorney must be structured as a general power of attorney. The power of attorney must be granted in writing and should ideally be notarized. Otherwise, the representative will not be able to dispose of property or GmbH shares, for example. A separate bank power of attorney is also advisable. A general power of attorney is no substitute for a will. However, it can help to close the gap between death and the granting of proof of inheritance, with which the heirs can prove their legitimate succession in legal transactions. The authorized representative is accountable to the heirs.

Power of attorney requires absolute trust

An entrepreneurial power of attorney confers far-reaching powers that could also be abused. The authorized representative is comprehensively entitled to represent third parties. For example, it would be possible for him to transfer a property owned by the principal to himself. A power of attorney should therefore only be granted in cases of absolute trust. It is worth knowing that authorized representatives must adhere to the instructions of the principal or act in accordance with the principal's presumed will when continuing the business. A business power of attorney can be revoked at any time, provided the principal has legal capacity. Revocation is effected by means of a declaration to the authorized representative and the return or invalidation of the power of attorney document. If several copies of the power of attorney are in circulation, all copies must be reclaimed.

Emergency kit should contain all important documents

In order to ensure the rapid continuation of the company in the event of an emergency, the designated representatives must be able to access software, licenses and passwords without having to search for a long time. It is therefore advisable to prepare an emergency kit. This should contain, for example, important documents relating to company contracts, customer and service provider contacts, production secrets, order backlogs and calculation data. Rental, partnership or loan agreements can also be stored here. It also makes sense to document annual financial statements and extracts from the land register. Authorized persons should have an overview of bank details, insurance policies and contact persons for financial and legal transactions. It is important that entrepreneurs inform their trusted persons about this precautionary measure and store the case in such a way that the contents can be used directly if required. The emergency kit should also be checked regularly and updated if necessary.