The BPR shares were owned by the deceased and are transferred to spouse under the will. The BPR company has announced a rights issue but it is unlikely that a Grant can be obtained before the date to take up the rights issue. The rights issue shares would accelerate immediate additional BPR relief for the spouse as the total ownership period is in excess of 2 years. The BPR company are saying that they cannot transfer the original shares to the spouse without sight of a Grant. Would it be possible for the executors to transfer the shares under a Deed of Appropriation before a Grant, assuming that is the BPR company agree to register the shares?
I would agree with the company s.774 CA 2006 is clear on the requirements for the grant.
S.773 allows the PR to submit the instrument of transfer. You can proceed and request the transfer.
S.771 (5) CA 2006 the company cannot refuse the transfer. Can enforce s.774 (what they’re doing).
A note on the rights issue. Typically the transmittee has no rights of pre-emption.
The articles of association are critical to establish the rights of the PR , the transmittee and any pre-emption rights (or exclusion).
To answer the question. The company technically under CA 2006 should not register a transfer of shares (of any type or method) without seeing the grant.
I have a related question regarding rights issues. Rolls-Royce Holdings plc has a rights issue that has a deadline of 11.00am on 11 November 2020.
The deceased held shares in RRH plc and the beneficiaries of the estate wish the rights to be taken up so in the absence of the grant of probate (and unlikely to be received before 11th November) what are my options? If there are no other options I will just have to let the rights be sold on the open market and the proceeds be added to the total estate.
The registrars said that they will just sell the rights and send me the proceeds after I furnish them with the grant of probate.
It does seem unfair that the rights of beneficiaries are disregarded just because of a delay in granting probate?
I do remember several years ago that on conversion of Alliance and Leicester building society that ‘free shares’ were held in a holding account until probate was granted. Seems to me that things have gone backward not forward.
The situation of Alliance & Leicester and Rolls Royce differ significantly. With A&L the shares constituted an absolute right; whereas with Rolls Royce shareholders were not entitled to shares, instead merely being given the opportunity to acquire additional shares at a discount to market value.
The RR registrars are responsible to the company’s members, and have no duty towards the beneficiaries of any trust or estate that might hold shares in RR. To create such a duty would likely give rise to unimaginable mischief (which is why it has been specifically excluded by successive Companies Acts).
In the absence of the executors having access to the necessary funds, in the past beneficiaries have often put the estate in funds so that the rights could be taken up in the name of the deceased (and thereby accrue for the benefit of the estate).
However, as the RR right are being sold and the estate will receive its share thereof, the beneficiaries of the estate have no loss (other than of a potential future gain/loss depending upon how the shares perform).
Paul Saunders FCIB TEP
Independent Trust Consultant
Providing support and advice to fellow professionals
It is unfair (if the grant is delayed), the articles do allow some movement on the ‘evidence’, CA 2006 states the grant:
Rolls Royce Articles of Association
A person becoming entitled by transmission to a share may, on production of any
evidence as to his entitlement properly required by the board, elect either to become the holder
of the share or to have another person nominated by him registered as the transferee. If he elects
to become the holder he shall send notice to the Company to that effect.
I received the grant of probate a few days after the offer closed and I sent this in straight away but the registrars said my application had failed and refunded my money!
I have now asked them to consider the new evidence and I await their reply. The money involved is relatively small, but it is the principle I am trying to establish which I think is equally as important.