Why sole directors need to have a WIll
There are many difficulties that arise when any person dies without leaving a Will, but when the person is also a sole director and sole shareholder of a company the difficulties can be even greater.
If a sole director who is also a sole shareholder has a Will, the executor or other personal representative appointed to administer the deceased’s estate may appoint a new director to run the company. The new director is able to manage the company and keep it running until the deceased’s shares are transferred to the beneficiaries, who can then appoint another director, if they choose to do so.
In circumstances where the sole director and sole shareholder dies without leaving a Will, an eligible person, normally a relative, has to apply to the Supreme Court for letters of administration to manage the estate. Applying for letters of administration is a time consuming process which could potentially take months.
Until letters of administration have been granted, a director cannot be appointed and there will be no one authorised to make management decisions on behalf of the company, give instructions to banks or financial institutions, or pay staff or suppliers. Essentially, the company may not be able to trade, which could cause significant detriment to the company. Further, if a decision is made to sell or wind up the company, the process could be delayed, and, as it has not been able to trade, the company’s value could be significantly reduced.
To ensure that your company can continue to run after your death, sole directors who are also sole shareholders should make sure that their Will is up to date and adequate. In any event, all directors should check that their company’s constitution adequately details what is to happen upon the death of a director.