What happens if a shareholder dies?
Incorporation Services Limited provides an expert service
for all your company formation and company law requirements, including advice
about share allotments and transfers.
When a shareholder dies his interest in the shares will pass to whoever inherits
them under his will or intestacy. The company has to accept evidence of probate
of the will or letters of administration: CA 1985 sec187. Nearly all companies
have the Table A provisions (set out below) which require the executor (or administrator
of the estate, etc.) to choose either to execute a stock transfer form, transferring
the shares to the appropriate person, or to apply by letter to be registered
by the company as the shareholder.
This will, however, be subject to any restrictions on transmission in the company's
articles. Table A provides that all restrictions on the transfer of shares apply
also to transmission (art. 30). Many companies have restrictions on transfer
in their articles, which may allow the directors to refuse registration of the
shares, or impose pre-emptive rights, etc. See further the related topic:
How are shares transferred?
The Table A provisions are:
TA 29: If a member dies the survivor or survivors where he was a joint holder,
and his personal representatives where he was a sole holder or the only survivor
of joint holders, shall be the only persons recognized by the company as having
any title to his interest; but nothing herein contained shall release the estate
of a deceased member from any liability in respect of any share which had been
jointly held by him.
30: A person becoming entitled to a share in consequence of the death or bankruptcy of a member may, upon such evidence being produced as the directors may properly require, elect either to become the holder of the share or to have some person nominated by him registered as the transferee. If he elects to become the holder he shall give notice to the company to that effect. If he elects to have another person registered he shall execute an instrument of transfer of the share to that person. All the articles relating to the transfer of shares shall apply to the notice or instrument of transfer as if it were an instrument of transfer executed by the member and the death or bankruptcy of the member had not occurred.
31: A person becoming entitled to a share in consequence of the death or bankruptcy
of a member shall have the rights to which he would be entitled if he were the
holder of the share, except that he shall not, before being registered as the
holder of the share, be entitled in respect of it to attend or vote at any meeting
of the company or at any separate meeting of the holders of any class of shares
in the company.
If the only shareholder/director of a company dies, those entitled to the shares
can ask the court to call a general meeting under CA 1985, sec371 and order that
the people entitled to shares can attend and vote as if members of the company.
Since the advent of the single member private company, modern articles often
make provision for such eventuality.
Related topics
|
