A business owner inadvertently left his farm services company in limbo following his death.
With no provision in his will for any other director to be appointed, the limited company could not operate.
Mr Russell Price was the sole owner and director of Russell Price Farm Services. He died on the 8 March 2020. In his will, Mr Price leaves his assets including the farm services company to his two children. However, the executors of his will – a close friend, his cousin, and the firm’s bookkeeper – discovered that he had left no provision for the appointment of another director upon his death. As a consequence, the firm’s bank froze its accounts making it impossible for the company to trade.
In normal circumstances, a company will not register executors at Companies House until they are able to produce a grant of probate. Probate can take a long time sometimes years and in that time the business would be irrevocably damaged.
The executors applied to the High Court for an order under section 125 of the Companies Act 2006 to rectify the register of members listed at Companies House.
Section 125 gives power to the court to rectify the register if:
(a)the name of any person is, without sufficient cause, entered in or omitted from a company’s register of members, or
(b)default is made or unnecessary delay takes place in entering on the register the fact of any person having ceased to be a member,
the person aggrieved, or any member of the company, or the company, may apply to the court for rectification of the register.
(2) The court may either refuse the application or may order rectification of the register and payment by the company of any damages sustained by any party aggrieved.
(3)On such an application the court may decide any question relating to the title of a person who is a party to the application to have his name entered in or omitted from the register, whether the question arises between members or alleged members, or between members or alleged members on the one hand and the company on the other hand, and generally may decide any question necessary or expedient to be decided for rectification of the register.
(4)In the case of a company required by this Act to send a list of its members to the registrar of companies, the court, when making an order for rectification of the register, shall by its order direct notice of the rectification to be given to the registrar.
Sitting as a Judge in the High Court His Honour Judge (HHJ) Paul Matthews, heard the case. He noted it was an unusual set of circumstances but that it was not without precedence citing Kings Court Trust Ltd v Lancashire Cleaning Services Ltd as a relevant case when making his judgement.
After considering the merits of the case, HJH Matthews issued an order to allow the executors to listed as directors at Companies House. He did this on the on the undertaking that the executors apply for probate immediately and pay the required inheritance taxes, from their own resources if necessary.
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