High Court Decision: The Rectification of a Company’s Register of Members

 

What do you do if a company’s sole member and director dies leaving the company unable to function without them, and you’re the executor of the will?

The case of  Williams v Russell Price Farms Service (2020) was a turning point for business law. The High Court granted the application made by executors under section 125 of the Companies Act 2006 (the Act) in order to rectify the company’s register of members following the death of the sole director and shareholder of Russell Price Farms Services.

Why is this case so important?

As the deceased was the sole member and director of the company, when he passed, it left the company withy no directors or living shareholders. This means that no one was able to do the necessary things such as accessing the bank account to pay creditors and running the day-to-day operations. Additionally, there was no mechanism in place for appointing new directors as the articles of association did not give the executors the power to resolve the issue. This is what lead to the executors to apply to the High Court to replace the deceased name with their own name. By doing this, they would be able to pass a resolution and appoint new directors to run the business.

In the application to the High Court, the executors stressed their intentions to apply for probate which reportedly, was important in the court’s decision to grant the order. The High Court granted an order, in accordance with section 125 of the Act for rectification of a company’s register of members to replace a deceased sole member and director with the executors named in his will.

What does this mean?

Firstly, this case highlights the importance of a company’s statutory registers as it does not appear enough to reply on the Companies House records. Also, it shows the importance of a company’s articles of association and ensuring that they are flexible. This will help to deal with unfortunate circumstance, protecting your company if things like this ever do happen.

Secondly, this case shows that you can apply to the court to rectify a company’s register of members. However, it can be a complicated process with many moving parts, so it is best to seek legal advice before doing so.

At Four Oaks Legal Services, we have the perfect balance of business law and private client law meaning we are well equipped for the job. If you want to discuss how we can help, please contact us on 01543 440308 or email us at stuart@fouroakslegalservices.com