Q&As

Can the personal representatives of a deceased shareholder exercise that shareholder’s voting rights and pre-emption rights?

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Published on LexisPSL on 21/01/2015

The following Corporate Q&A provides comprehensive and up to date legal information covering:

  • Can the personal representatives of a deceased shareholder exercise that shareholder’s voting rights and pre-emption rights?
  • Transmission of shares by operation of law
  • Rights of a transmittee to vote and exercise pre-emption rights
  • Articles provisions
  • Case law

Whether the personal representatives (PRs) of a deceased shareholder are entitled to exercise the voting and pre-emption rights of that deceased shareholder depends on a number of factors, including the terms of issue of the shares in question, the provisions of the company’s articles of association and the terms of any agreement relating to those shares (eg a shareholders’ agreement).

Transmission of shares by operation of law

On the death of a shareholder, their shares are transmitted to their PR automatically (ie they are transferred by operation of law, without any instrument of transfer being required), unless the shares are held jointly. Where the shares are held jointly, the interest of the deceased shareholder passes automatically to any remaining joint shareholder, in accordance with the company’s articles (for further information, see Practice Note: Joint shareholders and Q&A: Can personal representatives transfer shares in a company without a grant of probate?).

Therefore, the PR of a deceased shareholder are entitled to the shares of that deceased shareholder so far as the company is concerned, because they have legal title to them—this is the case even when the deceased shareholder has bequeathed their shares to a specific legatee (Roberts v Letter 'T' Estates Ltd). The legal title of a PR cannot be bypassed by the company’s articles purporting on the death of the holder to vest the shares in someone else (Re Greene).

However, before dealing with

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