Unfortunately, this is what can happen….

John runs his trading company as a sole director. He has 5 staff and is very hands-on, however, his staff need to be managed to keep the business running. He is also the sole director of the trustee company for his family trust.

John becomes very ill and is hospitalised. John’s son looks after the company and family trust whilst he is in hospital. After 7 days, John’s condition deteriorates and dies with his family surrounding him in hospital. John’s son handles all the funeral arrangements. John was very well known in his community as well as in his business network (ie. builders, tradespeople, bank, suppliers etc).

After the funeral, John’s son had every intention of continuing to manage the company and family trust. Unfortunately, he discovered that the bank accounts were frozen as the bank had learned about John’s passing. Since John was the sole director of all the companies, his son was unable to access any funds to pay wages or suppliers and keep the business operating.

Warning:

“during that period when there is no director, the company may be completely unable to operate. With no one properly authorised to make management decisions or act for the company, it may be unable to trade.”

Solution:

The simplest and quickest solution is to put in place a Successor Director.

In short, upgrade your company Constitution NOW to provide for a person known as the Successor Director to take over from a director if the current director is sick, dies or is subject to litigation including divorce or bankruptcy.

Post upgrade of the Constitution and signed resolution appointing a Successor Director in the event of incapacity, death or bankruptcy; the company will continue operating and conducting its business.

While this is crucial for companies with a sole director, having a successor director in place for companies with multiple directors safeguards the future succession of the company.

Next Step

To put in place the Successor Director solution NOW, please contact us so Atomic Business Advisers can review your current Constitution and then send a proposal to put in place the Successor Director Solution for you.

As always, do not hesitate to contact us.