Drafting an EBP

An emergency board plan (EBP) to deal with immediate management decisions in the event of a sudden absence can be a useful tool for estate practitioners and can focus the business owner’s mind on an area that might otherwise be overlooked as unimportant and generating unnecessary costs. An EBP is a non‑binding document that sets out a protocol for decision making in the event that the business owner is not available, either through incapacity or death.

What to include

An EBP will likely cover a wide range of areas, including how to manage the announcement of the death or incapacity, both internally and externally. It is crucial that communications to staff show that there is a clear, predetermined emergency plan that is being implemented. Another vitally important part of this is keeping key customers and investors informed as to what is happening.

The EBP will establish a protocol to deal with immediate pressure areas, such as bank loans, financing, debt management, cash‑flow issues and cheque‑signing authority. The plan might name trusted friends or advisors from other similar businesses who could be brought in to ‘steady the ship’ for a defined period. It will also assign key decision‑making roles to individuals currently within the organisation and identify a successor chair, as well as a process for hiring an interim chief operating officer, a chief financial officer and lawyers to monitor risks.

The EBP will also define how and when the board will be expected to report to the family or executors. Additionally, it will confirm how the interim board and advisors will identify the key decisions that must be taken in the first week, month, quarter and year after the death.