Company Share Register Updated without a Grant of Representation

Those charged with dealing with the estate of a deceased are very often hamstrung and restricted as to what can and cannot be done prior to obtaining a Grant of Representation. Where the deceased leaves a complicated estate with a variety of assets, it can take time to understand the extent and value of the estate so as to satisfy the tax and reporting requirements necessary prior to making an application for a Grant of Representation.

A recent case highlights the ability to take certain helpful action prior to a Grant of Representation being issued where the affairs of the deceased are complex and the delay in satisfying the tax and reporting requirements prior to obtaining the Grant of Representation may be detrimental to the estate and/or beneficiaries.

The case concerned the estate of an individual who, at the time of their death, was the sole shareholder and director of a company. On and according to the terms of the company’s articles (which adopted Table A), the deceased’s shares devolved by Will. However, the articles did not permit the estate administrators to vote the shares while they remained registered in the deceased’s name, nor did they empower the administrators to appoint a director. The consequence of there being no directors in place was that the company’s bank account could not be accessed to pay its creditors and fund its day to day operations and as a direct result, the business was in danger of failing.

The administrators of the estate sought advice and made an application for an order (under section 125 of the Companies Act 2006) to adjust the company’s register of shareholders and replace the deceased’s name with their own so as to enable them to appoint new directors so as to keep the business running. While the estate administrators fully intended to satisfy the tax and reporting requirements to obtain a full Grant of Representation, they were conscious it would take some considerable time to do so given the complexity of the deceased’s affairs and feared in the meantime, the business would fail without new directors being appointed.

The court found that section 125 of the Companies Act 2006 did facilitate an application in the manner requested by the estate administrators for rectification of the register. The facts of the case were such that the provisions of the section were satisfied: there was “unnecessary delay” in registering the fact that a person had ceased to be a member as a result of the complexity of that person’s affairs and the time to be taken to obtain a Grant of Representation. While the court doubted that the draftsman had in mind the circumstances arising in the particular case, given the exceptional urgency of the situation and potential for the business to fail, the court was satisfied that the unnecessary delay contemplated by the section arose.

This is one of several ways in which an application to take certain action in a deceased’s estate prior to obtaining a Grant of Representation can be made where there are exceptional circumstances and potential delays which have a detrimental impact on the estate of a deceased. Contact our Private Wealth Team to discuss this or other circumstances in more depth if that would be helpful.

[Image Source: Scott Graham on Unsplash]