Do you have plans in place if something were to happen to you?
No-one likes to think about the worst case scenario, but as a sole director/shareholder there can be serious consequences of not making plans for the future.
With no plans in place there may be no one to deal with current work in progress, or to deal with existing client queries, there may also not be anyone else who can access the company bank accounts which can result in suppliers and employees not being paid, the loss of jobs and customer and can ultimately lead to the closure of the Company, as the Company cannot continue to trade without a bank account.
There have been cases where Companies have closed down where plans have not been in place, as banks will freeze accounts where the Director has died and they are the sole shareholder/director with no plans for who will have authority if the worst should happen.
Do your Company articles allow personal representatives to appoint a Director?
If your articles are taken from the Companies Act 1985 they are likely to be “Table A” articles which don’t include a provision regarding the death of a sole owner, and if no other plans have been made i.e. included in a Will, then the company has no one in place to appoint a new Director, and the company is likely to be wound up.
If your articles are taken from the Companies Act 2006 then they include a provision that personal representatives can appoint a new Director if there are no other Directors or Shareholders.
If you have “Table A” articles and are a sole director there are a couple of things you can do:
- Appoint a company secretary – which can be done via Companies House, however be aware that there are certain responsibilities involved with being a Company Secretary.
- Adopt the new model articles – this will need to be done by a Solicitor.
If this is something that you think may affect you and you would like more information, then contact us at the office.