Family Company
Estate Planning for companies is often overlooked with the directors and shareholders believing that as long as they make a Will, then that’s it. … Wrong!
Here are some matters that must be considered as part of your Estate Plan if you have a company involved:
1. Shareholder succession
This is most important as shareholders ultimately control the company. Think carefully about who your shares are given to via your Will as those new shareholders will then control the company and its assets.
If there are shareholders in the company outside your immediate family, attention will need to be given to:
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rights of the remaining shareholders to buy out your shares independently of what your Will might say (these are sometimes called “pre-emptive” rights)
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any Buy / Sell agreement that might have been entered into by the Shareholders (often backed by Insurance policies) which will often be triggered by death.
2. Officeholder succession
Usually the shareholders appoint the officeholders (directors and secretary). The officeholders are responsible for day to day decision making.
You should check your company Constitution about how they are appointed and what the minimum number of directors is. You may need to update it. We now have a Pack to help you to do that. Change to Company Constitution Pack.
Some families appoint adult children as directors to the family companies long before the death of the parents so that in the event of an unforeseen death the operations of the company can continue.
Online Family Company Sucession Resources
Advanced Will (with specific gifting clause for shares)
Update Company Constitution (to allow for single director)
Change to a sole director company
More Resources >> www.onlinelegal.com.au
on October 11th, 2006 at 2:03 am
Three brothers have an equal number of shares in a family company . one wants to get his full entitlements out of the company and start his own seperate business. the other two don’t. what rights or remedies does the brother wishing to leave have.
thanking you
Anthony
Response:
This is a matter for specific and specialised corporate law advice from your usual lawyer which I strongly recommend. Matters for your solicitor to consider and advise you on include:
- The terms of the Constitution of the Company (previously called Memorandum and Articles of Association)
- The terms of any Shareholders Agreement / Arrangement
- Whether there are “pre-emptive rights” mechanisms that apply to facilitate the exit
- Terms of any relevant Employment Arrangements
- Possible restrictions on trade and confidentiality obligations
- Effective resignation as an officeholder of the company
- Release from personal guarantees
- Payment of lawful employee and dividend entitlements
As you can see there are many issues to consider. I hope this helps you pull some of the relevant documents together.
Regards
Onlinelegal
on January 14th, 2007 at 1:04 am
Hi,
I have purchased a residential property in my company name to develop & sell, now I have changed my mind and I want it to be transferred to my personal name and live in it…in this case do I have to pay stamp duty again…
The company was started 4 months ago.
Response:
Stamp Duty rules vary across Australia. I suggest that you take advice from your local lawyer. Tax implications should also be considered.
Onlinelegal