What happens if director dies

If the company has surviving shareholders, they can call a general meeting and pass a resolution to appoint a new director.

Similarly, directors are often the only persons permitted to authorise payments to employees, suppliers, and creditors. If the sole director-shareholder dies, there is no one to exercise these powers and authorise essential payments. If the company was incorporated under the Companies Act with Table A articles , the personal representatives of the deceased are not authorised to appoint a new director.

Instead, they will have to get a court order to approve the appointment, which can be a complex and time-consuming process. Until this is done, the shares of the deceased shareholder cannot be transferred to whomever is set to inherit them. Unfortunately, many companies continue to operate without adequate provisions in their articles of association. When a director dies, the law requires that Companies House is notified on form TM01 within 14 days. This form can be filed online or by post. Once received, Companies House will update the public record accordingly.

There will be no fee for Mortgage Advice. There may be a fee for arranging a mortgage. The Financial Ombudsman Service is an agency for arbitrating on unresolved complaints between regulated firms and their clients. More detail can be found on their website: www. Zenario CMS. Call: As mentioned above, the executor is ordinarily and most efficiently appointed by means of a valid will. Where there is no will, however, a near relative or other person would have to apply to the local Supreme Court for letters of administration to manage the estate and this could take some time- possibly weeks if not months.

Alternatively, in the absence of any immediate relatives or other obvious people to deal with the estate, the Public Trustee may step in and administer the deceased estate but this process can also take months. During that period when there is no director, the company may be completely unable to operate. With no-one properly authorized to make management decisions or act for the company, it may be unable to trade.

Equally, staff and suppliers may not be able to be paid, which can quickly have a deleterious effect on the reputation and value of the company to the beneficiaries of the estate.

If, on the other hand, a person is willing to purchase the company, they may not be able to do so quickly because there will be no recognized owner of the shares who can authorise their transfer until the testator has been appointed and settled the estate.

Even if the final decision is taken to wind up the company so all beneficiaries can be paid out, the delay of possibly several months may mean the value of the company will be much less than it might otherwise have been if it had been able to continue operating in the interim period.

Information sheets provide concise guidance on a specific process or compliance issue or an overview of detailed guidance. Zoe Pettigrew Solicitor.

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