Shares in a deceased estate

[tmot]

Good day,

I need advise:

A couple of years ago I started a company with a friend of mine in which we held 50% of the shares each and we were the only directors.

My friend passed away a couple of years ago at the stage when we were still trying to find our feet and his shares are currently held by his estate.
His family has no interest in holding on to those shares and they would rather sell them to get cash. His creditors also want the shares sold so that they can get their money.

We did not have a shareholders agreement or anything to address the eventuality of either one of us passing on. I am currently the sole director of the company.

I am faced with a predicament of having to choose between buying the shares myself or having the company buy back those shares (we do meet the requirement of the Companies Act).

Please advise on the best solution also looking at the possibility what will be best for all parties involved and the valuation of those shares.

[Andromeda]

Hi tmot, when was the company registered? Or put another way, was it registered under the 2008 Act or old Act?

[tmot]

It was registered under the 2008 Act.

[Andromeda]

To whom were the shares bequeathed?

[tmot]

The Shares, are under the Deceased Estate as he did not have a will.

[Andromeda]

That means that the estate is to be administered in terms of the Intestate Succession Act.

Although the 2008 Companies Act affords you substantial preemptive rights, I do feel that you should approach the executor, if one has been appointed, and discuss the valuation of the shares.

If there is no will, no executor will have been nominated and that means one must be appointed by the Master. This seldom happens overnight.