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Perpetual succession in a private limited company

Perpetual succession in a private limited company

Postby kachibibi » Sat Sep 13, 2014 9:31 am

Always hear that perpetual succession happens in a private limited company. Surely I understand this point since the company is a separate legal entity. But I wonder if all shareholders die in that company, plus there's a restriction to sell shares to external people (which mean no other people to own the company after those shareholders die), will the company still exist upon that i.e. the deaths of all shareholders? Or can the company still exist without any shareholders?
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Re: Perpetual succession in a private limited company

Postby dls » Sat Sep 13, 2014 8:01 pm

The same arrangements imposing restrictions also provide for what happens on the death of a shareholder.
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Re: Perpetual succession in a private limited company

Postby kachibibi » Sun Sep 14, 2014 1:38 pm

And usually what will happen?
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Re: Perpetual succession in a private limited company

Postby dls » Sun Sep 14, 2014 3:04 pm

the artcles provide for the co-shareholders to have first refusal, and the company will often ensure that one way or another the cost is insured for.
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Re: Perpetual succession in a private limited company

Postby atticus » Sun Sep 14, 2014 8:30 pm

Shares of a deceased shareholder go into that shareholder's estate, and may be transmitted in accordance with that shareholder's will.

A good shareholders' agreement will often provide for an insurance backed option that is triggered by the death of one shareholder, under which the others acquire his shares, the insurance payout being used to fund the purchase.

Not all companies have a shareholders agreement.
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