People Insights
Contact Us
Get in touch
Contact Us
Published On: December 8, 2022 | Blog | 0 comments

Business owners and loss of mental capacity: Limiting a Company’s exposure to Claims

Limiting a company’s exposure to claims is of utmost importance if the business owners lose mental capacity. Here is what you should know:

Exposure to risk

If a director loses mental capacity, the company is exposed to a range of possible claims.

A director can legally bind a company, even if he is acting outside the authority given by his company’s articles, as long as the person entering into the contract with the company does so in good faith, as stipulated in section 40 of the Companies Act 2006.

A company is exposed to risk in cases where the incapacitated director appears to have apparent authority and binds the company, even if he is acting in contravention of the company’s express instructions. It is also worth noting that Companies can also be vicariously liable for the wrongdoing of directors.

To minimise any exposure, the company should prepare a board minute recording the termination. Companies House should then be notified of any new director appointment (using form AP01) or director termination (using form TM01) within 14 days of the date of appointment or termination, and that the company’s register of directors is promptly updated.

David Wedgwood will be presenting at the STEP conference on 9th December 2022 where he will discuss the practical considerations in further detail. To sign up to the event, please click here.

* Disclaimer: The information on the Anthony Gold website is for general information only and reflects the position at the date of publication. It does not constitute legal advice and should not be treated as such. It is provided without any representations or warranties, express or implied.*

David Wedgwood

Head of Civil Litigation Joint Head of Court of Protection

Get in touch

Call, email or use a contact form – whichever suits you. We’ll let you know the best person to help you get started.

Call or Email

020 7940 4060

No comments

Add your comment

We need your name and email address to make sure you’re a real person. We won’t share your email address with anyone else or send you spam. Please complete fields marked with *.

Leave a Reply

Your email address and phone number will not be published on the website. Other visitors will not be able to see your contact information. Required fields are marked *

Contact Us

How can we help?

Request a Call Back

How can we help?