Dr Phil Hopley has provided expert contribution to Mishcon de Reya’s new briefing on ‘Managing The Risks of Director Mental Incapacity’ – Dr Phil Hopley explores how mental capacity can be assessed and the considerations when thinking about a loss of capacity, including who may have authority to make decisions on the director’s behalf.

A company director who lacks the requisite capacity to carry out their duties can have a serious impact on the ability of a company to carry out its business. Without a sufficient level of capacity, a director cannot take decisions on behalf of the company or, if they do, such decisions could be challenged and later set aside on the grounds of a lack of capacity. This could have serious ramifications in respect of business dealings and could cause the company financial loss. For example, if a director enters into a contract without the requisite capacity, that contract could subsequently be set aside.

Mishcon de Reya’s briefing explores the challenges around mental incapacity of directors, including stress testing the robustness of constitutional documents, considerations when appointing replacements and managing reputational impact.