Deceased or bankrupt shareholder summary

If one of your shareholders dies or is declared bankrupt, their assets pass to the person appointed to deal with their estate. So what do you do about their shares?

Representatives

If a shareholder dies, a personal representative takes over their estate to deal with it according to their will or the rules of intestacy. In the case of a bankrupt shareholder, a trustee in bankruptcy is appointed to use the bankrupt’s assets to pay off their debts.

The company should be informed in either situation so that it knows that the shares cannot be dealt with by the shareholder in question.

Options

Usually, a personal representative or trustee in bankruptcy will simply transfer the shares. They are entitled to do this, once they have provided evidence to the company that they can deal with the shares. However, they may choose to be registered as the shareholder if, for example it will take some time to transfer the shares or there is a forthcoming decision to be taken by the company that the personal representative or trustee in bankruptcy needs to vote on in the interests of the shareholder’s estate.

Evidence

Whether the personal representative or trustee in bankruptcy decides to transfer the shares quickly, or elects to be registered on the register of shareholders, the company must be satisfied that they are entitled to act. A personal representative should provide one of the following types of “grant of representation” as evidence of their appointment:

• a grant of probate, where the shareholder left a will and named executors to deal with their estate
• letters of administration and the will, where a will was made without naming executors, or the named executors cannot or will not act; or
• letters of administration, where there is no will.

A trustee in bankruptcy should provide the court order appointing them to the role.

Original documents should be produced, or office copies if the original cannot be provided.