What happens when a director dies?

Rozzi Rainbow · July 2011

Hi everyone, I'm hoping for some advice I can pass on to a friend.

Her son was a director of a Limited Company but he has died - what happens now? I can't seem to find any information on Companies House website. My friend just wants to get the Company closed down and thinks she needs to take over as director in the meantime. Is this correct, and if so will the usual rules of being banned from being a director for six years apply once the Company has been closed (it owes tax at present, which she doesn't want to become personally liable for). And is it just a case of sending in the striking off form with the £10 or is there something else entirely to do in this situation?

Many thanks for any advice.

Monsoon · July 2011

Sorry to hear about your friend's loss.

I'm assuming the son was the sole director and shareholder?

Whoever his shares were left to in his will will now own the company, and can vote in a new director. If the company has assets, the new director can then take over and sort it out.

If the company owes money and doesn't have assets, part of me would be inclined to leave it and let everything pass to the crown when CoHo eventually strike it off. I certainly wouldn't get your friend in to become director to deal with closing the company (especially someone in mourning, she will have enough on her plate).

If she did take on directorship then she would only become personally liable if she did something wrong. Broadly speaking a director is never personally liable for anything the company does as long as they act properly.

I'm not sure what you're refering to with regard the usual rules about 6 years etc. Why would anyone be banned? I'm confused (though that's not difficult to do haha)

Why don't you phone CoHo yourself and see what they say?

I have experience in closing companies, so if you can give a vague idea of the balance sheet I may be able to advise further.

Rozzi Rainbow · July 2011

Thanks Monsoon for your very helpful reply. I don't know many of the details as it's not a friend I've known very long, she's just asking for advice now she knows I'm an accountant!

I'm also assuming he was sole director and shareholder, and perhaps my friend has been left the shares which is why she feels she should become director - I'll clarify this with her.

I always thought it was more 'proper' to offically close the Company down rather than let Co House strike it off, and I think she just wants it sorted as quickly as possible. If she doesn't want to become director can it just be left with no director till the strike off goes through?

Yes I did think a director is never personally liable for anything but it's always nice to have it confirmed.

I always thought (although I may be wrong) that if a Company was closed down while still owing money that the directors were then banned from being directors of other Companies for six years. Otherwise people could just open a Company, incur a lot of expenses and not pay for them, then close the Company down so no-one has to pay. And then start all over again doing the same thing ....

Monsoon · July 2011

Rozzi Rainbow wrote: »

Otherwise people could just open a Company, incur a lot of expenses and not pay for them, then close the Company down so no-one has to pay. And then start all over again doing the same thing ....

They can. And they do! Do it too much, or do it really bad the first time round, and then a director can get disqualified, hence the 6 year thing. A general strike off, dissolution or even a low-key liquidation won't give a ban.

Yes, it's more proper to close it down, but under the cirucmstances it would be understandable if it was 'let go.' It all comes down to the particulars though. Your friend is under no obligation to become director, but CoHo will eventually strike off a company that has no officers.

Good luck.

Rozzi Rainbow · July 2011

Aah I see thank you, I thought the ban was always, not just if it was really bad/often. (I don't think it would affect her either way as she has no intention of becoming a director of another Compay.)

I'll pass your comments on to my friend thank you, does someone need to inform Co House that the director has died?

Thanks for all your help.

Monsoon · July 2011

I would phone CoHo to get general guidance..

Rozzi Rainbow · July 2011

I have just done that - easily sorted. Provided there are no other directors they are happy for everything to get left and the Company just be struck off in due course. Unfortunately they can't stop the accounts and annual return reminder/overdue letters going out. The only way to remove the deceased director would be by TM01 form but of course there's no-one to sign that!

But at least it's one less thing for my friend to worry about. And I've learned my something new today. Thanks again.

Monsoon · July 2011

No problem and thanks for updating the thread with your findings, good to know.

Remember when the company gets dissolved, all assets pass to the crown so if assets do exceed liabilities, you do want to get them out of there first : )

What happens when a director dies?

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