Small business owners do not just need a will. They need to be sure their business will be able to continue if the worst happens.
When the sole director of Cimarron UK Ltd died without these arrangements in place, her executor had to incur the cost and uncertainty of going to court. The company’s articles of association (the written rules about the running of the company) did not permit the executor to act as a shareholder or to appoint a director to run the company. This left the company without any shareholders or directors and facing a very real risk that it would have its assets frozen and be forced to cease trading.
Luckily, the court’s decisions allowed the executor to be registered as a shareholder and appoint a new director. However, the case gives a clear indication of the risks and potential costs that can follow when a company’s articles of association and a shareholder’s will do not provide sufficient clarity.
Getting your will and company structure in order is therefore vital to ensure that your company can continue to run smoothly following your death, particularly in the case of sole member companies. It can also protect your executors from a lot of unnecessary stress.
If you wish to speak with our experienced team of company & commercial lawyers, please call us on 01392 207020 or email firstname.lastname@example.org.