What happens to a limited company when the sole shareholder/director dies?
23 August 2018: The limited company is a legal entity and the shares will vest in the deceased’s estate.
The executor of the deceased’s estate will be in a position to make decisions to realise the value of the shares. In the case of an owner/managed business, it can be difficult to find out the value of the business where no one else has access to the management accounts of the company.
In some cases, the business could have a negative impact on the deceased’s estate and the entitlement to the beneficiaries. For example, if the director had given personal guarantees to business creditors. If the business cannot satisfy the debts in full, the creditors have a right to claim against the deceased’s personal assets.
BRI can assist an executor to identify the realisable value of the shares / business assets. In cases where the business is insolvent but does have assets to satisfy some of the debts we can assist the executor in making the right decisions for employees, creditors and the beneficiaries of the deceased’s estate.
Please contact any of our BRI management team for sound practical advice.