If a shareholder dies then their shares may need to be transferred to their Executor(s).

If a shareholder dies then what happens to their shares will need to be ascertained in the light of:

• The Will (if any)
• The Articles of Association
• Any Shareholders’ Agreement
• Whether the shares were held jointly

In most cases, the shares will have been held in the sole name of the shareholder and will simply pass in accordance with the Will. We have written a blog explaining the process in more detail

Note: In the above blog we explain that once Probate has been granted shares pass by transmission (i.e under operation of law). Technically, an instrument of transfer is not required in a transmission of shares. However, in practice, the transmission to executors or beneficiaries is processed in the same way as a conventional transfer.

Given this above we believe the clearest way for a company to record the transmission of shares is as follows:

Deceased shareholder -----> Executor(s) -----> Beneficiaries

Step 1. Transferring shares to The Executors

On evidence of the death of the shareholder the shares should first be transferred to the Executor(s).

If there is just one executor you would transfer the shares to that person. If there are two or more Executors you would need to create a joint shareholder. How do I create a joint shareholder?

The option to add a designation is always given after you have transferred shares.

Simply select Yes and add the designation exactly as you want it to appear including any "re" or "as".

In the above example you could add the designation "as executors of XYZ (Dec'd)".

When the Executors are ready to distribute the assets they will advise the company to whom the shares should ultimately be transferred ('the beneficiary').

Note: Often the Executor is the same person as the beneficiary.

Step 2. Transferring shares from the Executors to the Beneficiary

When the Executors are ready to distribute the assets of the estate they will advise the company to whom the shares should be transferred. The company then transfers the shares from out of the name(s) of the executors to the Beneficiary.

If the Beneficiary is a Trust see: How do I transfer shares to a Trust?

Note: Either transfer may give rise to a change in the PSC reporting requirements if there is either a new PSC or a threshold has changed.

What if the deceased held the shares jointly and the other joint holder survives?

If you want the records to show the surviving holder as the sole shareholder, transfer the shares from the joint holding to the surviving individual shareholder (see How Do I Transfer Shares?). You can usually enter the consideration as 0 rather than leaving it blank, as nothing is paid.

Whether the survivor takes the shares in this way depends on how they were held and the company's Articles. If in doubt, take legal advice.

The deceased person's appointment as a director is ended separately; see How Do I Remove a Director?