Why sudden death could be a living nightmare for your business

One report claimed that more than 4.5 million people have been affected over the last week alone with hospitals creaking under the strain. Thankfully the vast majority will make a full recovery. However, others may not be so lucky.

And OK, you may not care any longer, but spare a thought for the people you’d leave behind. When a sole shareholder-director dies one of the first things their ‘personal representatives’ need to do is appoint a new director, that way the business can continue running effectively. They also have to register the transfer of shares to new ownership.

The only relief available would be to make a court application to replace the deceased’s name with the representatives on the register of members. However, it’s a costly process where the outcomes are by no means certain.

The owner’s daughter approached us to urgently look at the matter when the bank froze the company’s account despite the business continuing to operate. As a result they could not pay any wages to employees or deal with outstanding debts.

However, the court made it very clear that this was an exceptional case and such relief would not be automatically available in all circumstances. This case highlights the difficulties faced by a company when a sole shareholder-director dies and although a positive result was achieved for our client, there is a way to avert these problems. If you would like to discuss how, please contact our Commercial Team today on 01254 297900 or via email [email protected].