2016 has not been a kind year to our celebrities, with fond farewells being bid to the likes of David Bowie, Alan Rickman, Terry Wogan, Ronnie Corbett, Victoria Wood and latterly Prince. In this blog post we look at what would happen to the fictional company, Terry Wogan Limited, following the death of its sole director and shareholder.
1. Art tickles
The style of articles of association adopted by Terry Wogan Limited will affect what happens after the death of the sole director and shareholder.
As the affairs of a company are managed by its directors, Terry Wogan Limited will need a new director to be appointed to be able to conduct any further business after the death of the sole director.
If Terry Wogan Limited has adopted the Model Articles (which apply automatically to companies formed after 1 October 2009), these contain an explicit provision authorising the personal representatives of the shareholder, by notice in writing, to appoint a person to be a director.
If Terry Wogan Limited has adopted the Table A Articles (which applied to companies formed before 1 October 2009), these contain the usual provision that a director may be appointed by an ordinary resolution of the members. In these circumstances, we recommend that the personal representatives of the deceased shareholder elect to be registered as the holder of the shares and then pass a written resolution to appoint a person who is willing to act to be a director of Terry Wogan Limited.
Regardless of whether the deceased has left a will setting out what they would like to happen with their shares, the procedure in the articles of association will need to be followed. The Model Articles and Table A both provide that the personal representatives of the deceased can elect either to be registered as the holder of the shares or to nominate another person to be so registered. Accordingly, where either of these articles of association apply and the deceased has left a will, the personal representatives can give effect to the deceased’s wishes and nominate the person specified in the will as the transmittee of the shares.
2. Is Terry Wogan limited to continue its floral dance?
Before appointing a new director, the personal representatives of the deceased will need to decide whether the business of Terry Wogan Limited is to continue, or whether following the death of the deceased director and shareholder the company is to be wound up. This decision will be key in deciding who the right person is to either progress the business or to bring the business to a close.
3. Togs (the other general suggestions)
For as long as Terry Wogan Limited continues in existence, it will need to file its annual accounts in accordance with the deadlines imposed by the Companies Act 2006. If the accounts are filed late, a penalty will be imposed on Terry Wogan Limited, which increases with the time that passes before the accounts are filed. Terry Wogan Limited will also need to file its annual return within 28 days of its made up to date. Although it is a criminal offence to file the annual return late, Companies House does not generally impose a fine if this is filed late.
The new director of Terry Wogan Limited will need to record the death of the sole director at Companies House by filing a form TM01. They will also need to write up the statutory books to record the termination of the deceased sole director’s appointment, the appointment of the new director and the transfer of the shares to the relevant transferee.
If the personal representatives of the deceased choose to do nothing in respect of Terry Wogan Limited, any creditor of Terry Wogan Limited could apply for a creditor’s voluntary liquidation to wind up the company. The Registrar of Companies also has the power under the Companies Act 2006 to strike any defunct companies off the register.
4. In need?
At such a difficult time, dealing with the running of a company may well not be high on the priority list or may be in the “too difficult to deal with” box. If that is the case, seek professional advice as soon as possible, so that you can be guided step by step through the process and the rules and regulations that are relevant to the circumstances.
For more information email firstname.lastname@example.org.