Why sole company directors and shareholders need a Will
Dying intestate (without a Will) can pose many complications for the ordinary person. But when a sole director and shareholder of a company dies without a Will it can have an even more devastating impact.
Upon the death of a sole director and shareholder of a company without a Will, there is no person properly authorised to immediately run the company, leaving many stakeholders scrambling for answers.
The risks are higher for sole directors and shareholders as there are no surviving directors to manage the company and appoint a new director.
Generally, a near relative or other person of the deceased will apply for Letters of Administration to manage the estate; however, this process can be lengthy. If no one applies for Letters of Administration, a creditor of the deceased can apply – this can result in the winding up of the company.
Alternatively, the Public Trustee may step in and administer the estate, but this process is also long.
The company may not be able to operate during the period where there is no director. Most banks and other financial institutions are unwilling to accept instructions for a company’s trading account if there is not an authorised person to do so. Furthermore, major stakeholders such as employees and suppliers may not be able to get paid during this time.
To avoid the pitfalls associated with intestacy, it is important that sole directors and shareholders of a company create a valid Will and make provision for who is the beneficiary or beneficiaries of their shares.