what happens if director of ltd company dies?

[sims53]

I wonder if someone can give me some advice. My partner died 3 weeks ago, two years ago he set up a limited company and went into the freight forwarding business with my brother in law. My partner was the director and my brother in law is the company secretary.

I am the sole beneficiary in my partner's will but I want to walk away from this company as I have no knowledge of this industry. I have no idea where I stand in terms of my responsibility to this company. Ideally I want my brother in law to take over the company as he knows the business inside out and to be frank..I really don't want any part of it.

Hope someone can help as it's really worrying me at the moment, as i need to secure my future and this is an huge burden.

many thanks in anticipation

 

[S-Marketing]

In your situation I think an Accountant and a Solicitor would be preferable to asking on a forum.

Apologies for being blunt, but you need to get the situation sorted properly.

 

[Merchant UK]

I wonder if someone can give me some advice. My partner died 3 weeks ago, two years ago he set up a limited company and went into the freight forwarding business with my brother in law. My partner was the director and my brother in law is the company secretary.

I am the sole beneficiary in my partner's will but I want to walk away from this company as I have no knowledge of this industry. I have no idea where I stand in terms of my responsibility to this company. Ideally I want my brother in law to take over the company as he knows the business inside out and to be frank..I really don't want any part of it.

Hope someone can help as it's really worrying me at the moment, as i need to secure my future and this is an huge burden.

many thanks in anticipation

As you are the sole beneficiary and providing your partner left there company shares to you then if you want you will need to register as a Director at companies house and claim your shares. You can then sell your half of the company to your brother in law, but he will also need to become a director, if you think of giving up your directorship and shares.

The company needs to have 1 director to legally continue.

Good luck and my condolances for your loss, i can't begin to imagine what you must be going though.

Gerry

 

[sims53]

thanks so much Gerry that's so helpful and gives me somewhere to start as I had no idea where to begin.

Fiona

As you are the sole beneficiary and providing your partner left there company shares to you then if you want you will need to register as a Director at companies house and claim your shares. You can then sell your half of the company to your brother in law, but he will also need to become a director, if you think of giving up your directorship and shares.

The company needs to have 1 director to legally continue.

Good luck and my condolances for your loss, i can't begin to imagine what you must be going though.

Gerry

 

[Chris Ashdown]

They are two different items, yes the company must have at least one director but there is no need to become one to inheret the shares

Can you tell us if the company shares were all held by your partner or split in some fashion with your brother in law

IF your partner owned 100% of the shares and they were left to you in his will, you now own the business, but as a new business you will probably find it is not worth very much and not of interest to many outside investors

If he owned 50%/ 50% with your brother in law then you own 50%

You have two easy choices if you don't want to run the company

Sell all you own to another party be it to your brother in law or another ( as a limited company there might be restrictions on who you sell to if you dont own 100%) and let them become a director

The second obvious choice is if you own 100% make your brother in law a director and give him a shareholding under 50% to run the business and you stand to get a profit each year if the company makes money. you will still own the majority of the company and can do what you want with it latter

third if 50/50 just sit back and take a dividend payment each year

Hope this helps

 

[KM-Tiger]

Just to echo that you should get professional advice on this.

Assuming you are now the owner of your partner's shares then yes you could sell them to your brother in law, and thus remove yourself from the company. Valuation of the shares is tricky and if neither the company nor your brother in law have the cash to pay you, then some other arrangement must be made. Much as you have no wish to be involved in the company, there is no reason to part with your share of it under value.

There is also the possibility that there is a Shareholders Agreement that will govern what happens in this situation.

If I were you I would do nothing and sign nothing until you have advice from an accountant and/or solicitor.

Please accept my condolence, and Good Luck!

 

[sims53]

Thanks Chris..from the little I've gleaned, i believe that the shares were split with my brother in law but I'm not sure how these have been apportioned. My partner's will was made many years ago long before the company existed so there is no mention of the shares. His will is fairly straightforward and leaves everything to me. I think the first option you mentioned is the route I would be interested in pursuing as i really don't want the responsibility of a company in this current economic climate.

I really appreciate your advice, it's very much appreciated.

Many thanks

Fiona

They are two different items, yes the company must have at least one director but there is no need to become one to inheret the shares

Can you tell us if the company shares were all held by your partner or split in some fashion with your brother in law

IF your partner owned 100% of the shares and they were left to you in his will, you now own the business, but as a new business you will probably find it is not worth very much and not of interest to many outside investors

If he owned 50%/ 50% with your brother in law then you own 50%

You have two easy choices if you don't want to run the company

Sell all you own to another party be it to your brother in law or another ( as a limited company there might be restrictions on who you sell to if you dont own 100%) and let them become a director

The second obvious choice is if you own 100% make your brother in law a director and give him a shareholding under 50% to run the business and you stand to get a profit each year if the company makes money. you will still own the majority of the company and can do what you want with it latter

third if 50/50 just sit back and take a dividend payment each year

Hope this helps

 

[sims53]

Many thanks...I am seeing a solicitor tomorrow and will be speaking to the company accountant in the next few days, so hopefully will get this all sorted out. I'm very grateful to you all for your advice.

Fiona

Just to echo that you should get professional advice on this.

Assuming you are now the owner of your partner's shares then yes you could sell them to your brother in law, and thus remove yourself from the company. Valuation of the shares is tricky and if neither the company nor your brother in law have the cash to pay you, then some other arrangement must be made. Much as you have no wish to be involved in the company, there is no reason to part with your share of it under value.

There is also the possibility that there is a Shareholders Agreement that will govern what happens in this situation.

If I were you I would do nothing and sign nothing until you have advice from an accountant and/or solicitor.

Please accept my condolence, and Good Luck!

 

[JohnsonandJohnson]

Many thanks...I am seeing a solicitor tomorrow and will be speaking to the company accountant in the next few days, so hopefully will get this all sorted out. I'm very grateful to you all for your advice.

Fiona

Fiona,

Sorry to hear of your loss.

I would also advise to obtain a copy of the shareholders agreement, most Ltd companies have these, and each director would hold one; this is an agreement that is delivered by the appointed company solicitors.


I would also enquire whether there was also any keyman insurance policies signed by the directors; including your beloved. These policies cover the event of the loss of key personnel within a business; I suppose as Directors we take these types of policies out to protect our interests, being personal and business.

In some events attached to the Keyman Insurance policy is a Will, which in some cases outlines the wishes of a deceased director in terms of family.

Deepest sympathy,

Martin

 

[Chris Ashdown]

Most companies pay a dividend each year out of profit

As a shareholder you can keep your shares if the Brother in Law cannot afford to buy them and as long as the company makes a profit and declares a dividend you will be paid your % of the dividend payment which may grow to quite a sum if the company grows

You could also sell your shares in smaller blocks say 5% a year to your BIL over a period to make it easier for him to buy them

When you see the solicitor dont forget to ask how much he charges and a estimate of the whole bill and what he will be doing as they can be very expensive, also take all info with you otherwise he will charge for getting it, the accountant will probably give you info for free in this case but will normally be far cheaper than a solicitor

 

[Merchant UK]

thanks so much Gerry that's so helpful and gives me somewhere to start as I had no idea where to begin.

Fiona

No Worries Fiona,

If your partner left you his share of the business then you'll want to try and get the best price possible, after all its what he would of wanted, for you to be "looked after" from all the hard work he put in.

best bet would be to chat with the accountant and try to get some form of value of his half of the company, and then ask your brother in law to make an offer or try and buy you out if you don't want anything to do with the business.

Don't just walk away and wash your hands, theres a decent amount of money, hopefully in the business, and rightfully half is yours.

Good luck