Startup founders, co-founders, directors, and shareholders in private Irish companies concerned about succession planning.
Readers will gain clarity on legal processes under Companies Act 2014, identify risks of founder death, and learn practical protections like cross-option and shareholders' agreements to ensure business continuity.
Key Takeaways
Shares transmit automatically to the personal representative on death; company recognizes only them post-probate.
Without protections, deceased founder's shares may go to unrelated beneficiaries, risking company control and decisions.
Cross-option agreements provide mutual options to buy/sell shares, funded by life insurance for smooth transition.
Shareholders' agreements should include pre-emption rights, valuation, drag-along/tag-along, and reserved matters for death.
Always have a will; intestacy rules may distribute shares against business interests.
Laura Ryan is a practising Barrister at the Bar of Ireland. She graduated from the Honourable Society of King’s Inns in 2024, having previously qualified and practised as a Chartered Accountant in a big four accounting firm.
Shares become part of the deceased's estate and do not vanish. Per Section 96 of the Companies Act 2014, the company only recognizes the personal representative (executor or administrator) after probate or letters of administration. No one else can deal with them until then.
What is the difference between transmission and transfer?
Transmission occurs automatically by law on death, passing shares to the personal representative without a transfer form. Transfer is a voluntary sale or gift using a formal document. The representative can elect to register or nominate another.
What is a cross-option agreement?
A cross-option agreement gives surviving founders the option to buy deceased's shares from the estate, and the estate the option to sell. It's mutual options for tax efficiency, often funded by life assurance policies on each founder.
What practical steps should surviving founders take?
Notify the company, contact the personal representative, check constitution, avoid major decisions, await probate, review life policies. Directors can manage daily operations as powers are separate from shareholding.
What happens if there is no will?
The estate follows intestacy rules under Succession Act 1965, passing shares to spouse, civil partner, or children by law order. Beneficiaries may not align with business needs, emphasizing need for will and shareholders' agreement.
