If you are the sole director and shareholder of a company, it is critical that you have a current will in place.
Ordinarily, when the director of a company dies, surviving directors can maintain normal management of the company. When a sole shareholder of a company dies, the directors can continue to manage the company until the beneficiaries under a will are transferred their shares.
However the situation becomes more complicated where one person is both the sole director and shareholder of a company and they die. Fortunately, s 201F of the Corporations Act 2001 provides a solution by enabling the executor of the deceased director and shareholder to appoint a new temporary director to the company.
But if a sole director and shareholder dies without a will – the company, the business it conducts and its assets will remain in limbo (and be unable to operate) until a relative or other person applies to the Supreme Court for letters of administration to be named the legal personal representative. Unfortunately this process of applying for letters of administration as well as costing extra money will (at very best) take a number of weeks.
Financial institutions (including banks) won’t transact with a company lacking an authorised decision-maker. This will leave staff and suppliers unpaid – risking not only the value of the company, but its industry reputation.
Don’t put your company and its business at risk!
For help preparing your will – and to make proper provision for the ongoing operation of your company – contact our Wills & Estates team on (03) 9548 5500.
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