Emergency planning in the family business: Regulating responsibility in good time

The loss of an entrepreneur is not a scenario that people like to imagine – and yet it can become reality at any time. Accident, illness, sudden death: while IT outage and crisis plans have long been standard in many companies, there is often a lack of clear regulation for the most critical emergency – the sudden loss of entrepreneurial leadership.

In family businesses or owner-managed companies in particular, such a loss can have far-reaching consequences: Decision-making processes come to a standstill, access to banks is blocked, powers of attorney are missing – and it is not uncommon for the entire company to come to a sudden standstill.

Forward-looking emergency planning is therefore not a question of size or sector, but an expression of corporate responsibility.

Ensuring the ability to act – even in a state of emergency

The central question is: What happens if the entrepreneur is no longer available from one day to the next – whether for weeks or permanently? Who can act in a legally binding manner? Who can dispose of accounts, conclude contracts, take personnel measures or represent the company externally?

Many of these questions can only be answered if a structured provision model has been established at an early stage. It's not just about documents, but also about clear regulations, responsibilities and access rights – both in the company and in the private sphere.

Seven core elements of effective business contingency planning

1. Durable power of attorney with entrepreneurial scope
   
   A privately formulated power of attorney is often not enough. Entrepreneurs need specific regulations that also cover the exercise of shareholder rights, management powers and company decisions. These durable powers of attorney should be clearly formulated, notarized or certified and registered in the central register of durable powers of attorney (Zentrales Vorsorgeregister).
    
2. Representation regulations in the articles of association and in the management
   
   In GmbHs, GmbH & Co. KGs or family companies, it must be checked whether and how representation is regulated in an emergency. Is there another managing director? Are individual representation regulations sufficient? Are there reservations of consent? The articles of association can also provide for supplementary regulations, for example, for the appointment of an emergency managing director.
    
3. Testamentary provisions with regard to the company
   
   Not all heirs are automatically entitled to manage or participate in the company. Wills should be drafted with the company in mind: clear inheritance or legacy provisions, execution of the will, if necessary, coordination in the articles of association (keyword: qualified succession or entry clauses, compensation regulations or restrictions). Furthermore, inheritance tax consequences should also be examined at an early stage.
    
4. Access rights and powers of attorney in the operating business
   
   Who has access to bank accounts, contracts, tax documents, insurance policies or digital systems? Where are passwords stored and where are authorizations documented? A systematically maintained list of powers of attorney and a clear authorization structure are often more important than any emergency manual.
    
5. Document and information structure
   
   An up-to-date overview of all relevant documents – contracts, shareholder resolutions, real estate documentation, loan agreements, insurance policies – should be stored centrally and be accessible to the group of authorized persons. The same applies to emergency contacts (tax advisors, lawyers, bank contacts, consultants).
    
6. Succession and interim considerations
   
   If there is no successor in the family, it must be clarified who could take over the operational management in an emergency (possibly on an interim basis): an advisory board, an interim managing director or a prepared management team? Models such as the entry of an investor can also be strategically prepared.
    
7. Tax precautions
   
   Even the valuation of the company in the event of inheritance can trigger considerable tax consequences – especially if the heirs are not actively involved or a break-up is to be avoided. The tax valuation and structuring of the company (inheritance tax, Art. 13a ErbStG et seq.) should be regularly reviewed and, if necessary, tax arrangements should be made in advance.

Precautionary measures are not an emergency solution – but part of entrepreneurial professionalism

Today, contingency planning is one of the strategic duties of a responsibly managed family business. It cannot be ticked off a checklist, but requires a coordinated, interdisciplinary structure – between corporate law, inheritance law, tax law and operational organization.

Entrepreneurs who create clarity not only relieve the burden on themselves, but also on their family, employees and shareholders. And above all, they secure the company's ability to act – even if they are no longer able to do so themselves.