February 8th 2018 / BY: Wisteria

What happens when a company director dies?

In the unfortunate event that a company director passes away, two situations can arise. Before we jump in any of the two scenarios it is important to note that Companies House needs to be notified of the death.

How do I notify Companies House?

A company can do so by filing the form termination of a company director appointment document. Moreover, the company register of directors will need to be updated to reflect the unfortunate event.

Impact on company

The consequences of a director’s death can greatly vary from company to company. The extent to which it varies depends on whether the company is comprised of one director only or several directors.

Situation 1: Several Directors

In the event the company has several directors and one of them passes away, the company can still operate. In most cases the surviving directors can simply split and share the responsibilities of the deceased.  If the director was also a shareholder of the company, it is important to seek specialist advice on what happens to the deceased’s shareholding as their Will may stipulate what will happen.

Situation 2: Sole Director

A company with a sole human director will face greater difficulty.

If the company still has remaining shareholders after the director has passed away then the shareholders can hold a meeting in order to appoint a new company director. However, in the case that the deceased officer was the sole director and sole shareholder of his company, two options arise:

  1. If the company was incorporated before 2006 Companies Act then the personal representative of the deceased shareholder’s estate has the duty to request a court order for the designation of a new director. However, this is likely to be both costly and time-consuming.
  2. If the company was incorporated after 2006 Companies Act then the personal representative of the deceased’s estate is allowed to appoint a new director. There is no need to seek a court order.

Companies incorporated before 2006 can always revisit parts of their Articles of Association in order to allow the personal representative of the sole shareholder to appoint a new director.

Great care should be taken with corporate structures, directorships and shareholdings upon a death of an officer. As such, it is recommended that if this occurs, you reach out to one of our formations specialists to confirm what your next steps should be.

If you would like more information or have any questions about the Company Secretarial matters, then please do not hesitate to contact us at 020 8429 9245 or send us an email at info@wisteria.co.uk.