Q&As

What procedure should be followed to acquire or cancel the shares of an untraceable shareholder?

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Published on LexisPSL on 16/06/2016

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

  • What procedure should be followed to acquire or cancel the shares of an untraceable shareholder?
  • Transmission of shares
  • How to deal with the shares of an untraceable shareholder
  • Protection of minority shareholders
  • Rectification of the register of members

What procedure should be followed to acquire or cancel the shares of an untraceable shareholder?

Having a shareholder who cannot be located can cause practical difficulties for a company (eg, in relation to its administration). However, it may be possible to obtain the shares of an untraceable shareholder and remove their name from its register of members, so that they cease to be a member of the company.

This Q&A assumes that the untraceable shareholder holds shares in a company that is not a listed company or AIM company.

Transmission of shares

There may be a suspicion that an untraceable shareholder in a company is deceased. Upon the death of the sole holder of shares, the title to their shares is transmitted to their personal representatives. A company’s articles of association will usually contain some provisions in relation to the transmission of shares and these should be checked carefully if a transmission of shares has taken place. The personal representatives of a deceased shareholder, subject to any provisions in the company’s articles, may transfer any shares transmitted to them without being registered as a shareholder or they may have their names entered in the register of members as a shareholder with the approval of the company’s directors. For more information, see Q&A: Can personal representatives transfer shares in a company without a grant of probate?

Therefore, in the case

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