Company secretaries and corporate service providers see family trouble before anyone else does. The founder’s signature stops appearing. A director resigns without explanation. Two siblings send conflicting instructions on the same day. Someone asks for a copy of the share register “just to check”. You are expected to keep the company compliant while the family that owns it is coming apart, and you are often asked to take sides.
Situations you will recognise
- The sole director and shareholder dies. The company has no one to act. Bank accounts are frozen, and staff and suppliers need paying. In many cases the deceased’s legal personal representative can appoint a director under the Corporations Act. But who that is, and whether they have a grant yet, is a legal question.
- Transmission of shares. The executor wants to be registered as shareholder, or to transfer the shares directly to beneficiaries. The constitution may contain pre-emptive rights, director discretions or restrictions on transfer that the family has never read.
- Deadlock. Two branches of the family hold 50% each and the directors cannot agree on anything, including the annual accounts.
- Minority shareholders shut out. A sibling who inherited shares is removed as director and receives no dividends, while the others draw salaries. That is the classic ground for an oppression claim.
- Requests for records from shareholders, executors or beneficiaries, and the question of what you can provide and to whom.
Where we help
- Advising the executor or family on who can act for the company, and how, between death and probate.
- Reading the constitution, shareholders’ agreement, trust deed and will together, so the transfer of shares does what the family intends.
- Negotiating or mediating shareholder disputes among family members, in English, Mandarin or Cantonese, before they reach court.
- Acting in shareholder and estate litigation where it cannot be avoided.
Why work with us
We understand that your role is administrative and independent, and we will not ask you to choose sides. A neutral lawyer and mediator on the family’s side of the table often takes pressure off you as company secretary. We will keep you informed on what you need to do to stay compliant.
Frequently asked questions
Who can act for a company when its sole director dies?
In many cases the deceased’s legal personal representative can appoint a new director under the Corporations Act. Who that person is, and whether they have obtained a grant of probate or administration yet, is a legal question. Until someone has authority, bank accounts may be frozen and staff and suppliers may go unpaid, so early advice matters.
Can an executor transfer a deceased shareholder’s shares to the beneficiaries?
Often yes, but the company constitution must be checked first. The executor may be registered as shareholder or may transfer the shares directly to beneficiaries, but the constitution may contain pre-emptive rights, director discretions or restrictions on transfer. Reading the constitution, shareholders’ agreement, trust deed and will together helps ensure the transfer does what the family intends.
What is an oppression claim in a family company?
An oppression claim is a court application by a shareholder who says the company’s affairs are being conducted in a way that is oppressive or unfairly prejudicial to them. A classic example in a family company is a sibling who inherited shares being removed as a director and receiving no dividends, while the other family members draw salaries.
Should a company secretary take sides in a family shareholder dispute?
No. A company secretary’s role is administrative and independent, and their task is to keep the company compliant while the family resolves its differences. A neutral lawyer and mediator working with the family can often take pressure off the company secretary, and keep them informed on what they need to do to stay compliant.
Chua Tan Associates advises families, executors, trustees and their professional advisers on estate planning, estate administration and estate disputes, in Australia and across borders. To arrange a confidential consultation, please contact our Melbourne office on +61 3 9602 3988 or submit an enquiry. Advice is available in English, Mandarin and Cantonese.
Justin Chua (蔡智勋), lawyer and mediator, Chua Tan Associates, Melbourne. General information only, not legal advice. Victorian law unless stated otherwise.
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