Death of a director, passing to surviving director (spouse)

2stixoftwixes

My husband and I are joint directors of our Ltd company.
I am the person with significant control
Sadly my husband has just been diagnosed with cancer

I always assumed the surviving director automatically carried on running the company, but it seems to be a bit more complicated than that

We have wills leaving everything we own to each other, but the company isn't mentioned in either will
Does the company have to be mentioned explicitly in our will, or would it be classed as intestate because it isn't

Bookworm225

it is the shares that matter, not the fact you are directors.

do you own all the shares or "only enough" to give you significant control? So husband is a minority shareholder. Any external shareholders?

On his death his shares form part of his estate and so they have a value for inheritance tax purposes. If they are not specifically mentioned in the will then they form part of his residual estate and will be dealt with in accordance with whatever the will says happens to that residue.

Establishing what the value of a minority holding in a close company would be is best left to a professional valuer 

Bookworm225

PS surviving directors carry on running a company (subject to any rules in the company articles of association regarding minimum number of directors needed and election of them)

shareholders do not run companies, they elect directors to do it on their behalf 

may sound pedantic but it is a distinction that matters in terms of death 

2stixoftwixes

Hi
We both own 50% but I run the company

According to the incorporation file it states 

The Company's share capital is:

£1,000.00 divided into 1,000 ORDINARY shares of £1.00 each

and my husband and I both own 50 shares at £1 each.   No other share holders

I can't see anything about surviving directors in the incorporation document (2007), but there's a lot of writing

user1977

Shares are inherited, not directorships. 

DullGreyGuy

2stixoftwixes said:

Hi
We both own 50% but I run the company

According to the incorporation file it states 

The Company's share capital is:

£1,000.00 divided into 1,000 ORDINARY shares of £1.00 each

and my husband and I both own 50 shares at £1 each.   No other share holders

I can't see anything about surviving directors in the incorporation document (2007), but there's a lot of writing

It would be very odd for there to be anything explicitly about the death of a director, there may however be rules to say there must always be at least 2 directors, its not in the model clauses so you'd have had to make the active decision to add that when you incorporated. Such a clause will be neutral on the reasons why the board may lose a director or more. 

Your last comment suggests you haven't ready your company rules properly? Given everything else going on for your right now it may not be the right time but you should know your company rules and so stick it somewhere in the middle of your to do list. 

As others have already mentioned, his will should deal with what happens to his shares, the directorship is a matter for the shareholders and the company rules. If they are not explicitly mentioned in the will, which is fine, they will follow the disbursement of the unspecified elements, the "and everything else will pass to my Spouse or split evenly between my spouse and surviving children" or whatever it says. 

Bookworm225

DullGreyGuy said:

2stixoftwixes said:

I can't see anything about surviving directors in the incorporation document (2007), but there's a lot of writing

Your last comment suggests you haven't ready your company rules properly? Given everything else going on for your right now it may not be the right time but you should know your company rules and so stick it somewhere in the middle of your to do list. 

he beat me to echoing that sentiment.
If you are a director but can't be bothered to understand the rules over what you are directing then not a great way to run a company.

so you are joint shareholders, and as I said his shares will pass to whoever his will leaves them to. His directorship dies with him, at which point you are sole director but may, or may not, be sole shareholder. The company will need to be valued so that his 500 x £1 shares can be declared correctly in his probate return. Please understand that the value of those shares is not £500, the company is actively trading and I assume profitable, so ownership of half of the company is worth more than what the shares cost to buy.