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WHAT HAPPENS TO A COMPANY, WHEN ALL SHAREHOLDERS AND DIRECTORS ARE DEAD? Daily Law Tips (Tip 617) by Onyekachi Umah, Esq., LL.M, ACIArb(UK)
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The persons that own shares in a company are called shareholders and they are the real owners of the company. They are liable for the profit and loss of their company. A director of a company is a person appointed by a company to direct and manage the business and affairs of the company. Directors of a company are the eyes, mouths, hands and legs of the company through which the company operates. Hence, Directors are the gate keepers and foot soldiers of shareholders. A director can also be a shareholder.
Every company must have at least two (2) directors at all times. Where the number of directors falls below two (2), then the company must appoint another director within one (1) month and shall not continue business unless such appointment is made. Where for any reason, all shareholders and directors of a company are dead, what happens to the company? Who will take over the business and affairs of the company? Who will appoint new directors and shareholders?
Companies and Allied Matters Act 1990 is a federal law that governs formation, management and dissolution of companies in Nigeria, through a federal agency; the Corporate Affairs Commission (CAC). Going by the provision of the federal law, where all shareholder and directors of a company are dying (or dead), any of the personal representatives of the dying or dead shareholders shall be able to apply to the court for an order to convene a meeting of all the other personal representatives of the dying or dead shareholders entitled to attend and vote at a general meeting, for them to appoint new directors to manage the company.
If the personal representatives of dying or dead shareholders of a company fail to convene a meeting, the creditors of the company are empowered to do so. The death of all directors and shareholders of a company is not the death of the company rather a call for change of ownership and management of the company. This further shows that truly companies are separate legal beings different from their owners (shareholders), directors, workers and agents.
My authorities are:
1. Sections 244, 246 and 248(2) of the Companies and Allied Matters Act, 1990.
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