Transmission of Shares
Death Of A Shareholder
When a shareholder dies his interest in the shares will pass to whoever inherits them under his will or intestacy. For the company the following steps need to be taken:
- View Death Certificate and note details of death in Register of Members
- View the grant of probate or letters of administration evidencing the identity of the deceased's personal representatives ensuring this is either an office copy (sealed by the court) or a photocopy certified by a solicitor (Section 774 Companies Act 2006).
- Copy of the grant of probate or letters of administration taken for company records and originals (or photocopies) endorsed with a note that it has been produced to the company. If the deceased shareholder's share certificate(s) is (are) also submitted, a similar endorsement to that in the Register of Members will be made on the certificate(s).
In respect of very small estates it is not obligatory to obtain probate or letters of administration. In such circumstances the secretary should obtain an appropriate statutory declaration and indemnity.
If one of two or more joint shareholders dies, the remaining shareholder(s) is (are) entitled to deal with the shares and it is only necessary for the death certificate of the deceased shareholder to be produced to the company.
Transmission Of Shares
Although grant of probate or letters of administration is evidence of the identity of those entitled to act in the place of the deceased it does not make the personal representatives shareholders in the company. This is effected by transmission of the shareholding.
Where a transmittee becomes entitled to shares he can either:
- Notify the company in writing that he wishes to become the holder of the shares (i.e. be registered as the holder in the Register of Members), a LETTER OF REQUEST would need to be completed and submitted to the company; or
- Choose to transfer the shares to another person (in which case a share transfer must be executed) signing as personal representative of the deceased shareholder.
No stamp duty is payable either on the request by the personal representatives to be registered as members or on a transfer of shares executed by personal representatives on behalf of the deceased. If the personal representatives elect to have the shares registered in their names any subsequent transfer made by them could be liable to stamp duty.
Model Articles And Table A
Nearly all companies have either the Model Articles or the Table A provisions.
The model articles for private companies introduce the concept of a transmittee - a person entitled to shares in consequence of the death or bankruptcy of a shareholder or otherwise entitled by operation of law.
The model articles provide that the transmittee is not entitled to attend or vote at general meetings before becoming the holder of the shares himself but otherwise has all the rights the shareholder had. This is subject to any specific provisions that the individual company's articles may make.
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