Abatement (or not?) of a gift of a business interest

I would welcome any views on the effect of this somewhat unusual Will clause.

By her home-made Will Tessa left three specific gifts: her home, her jewellery, and her business Random Co Ltd. Tessa was sole shareholder and director of Random Co through which she ran her pub, The Snail & Bottle. Aside from the The Snail & Bottle, Random Co had no other assets, but significant liabilities. There is no cash or other asset in the estate and no residue.

The handwritten business gift clause states: “Random Co Ltd I give to Joe Bloggs (including all its assets) and require that he issues a shareholding in the following proportions [naming nine individuals and percentages] retaining 15% for himself.” Joe Bloggs is not the named executor.

Does the interest in Random Co abate like other property, and if so how is that achieved? My initial thought is that the named beneficiaries are entitled to a chose in action only in the net assets of Random Co, and that they cannot force Joe to issue any shares.

Is there any reason why the executor cannot appoint new director/s (model Articles are adopted), who can arrange to sell the The Snail & Bottle, discharge the business liabilities, and return the balance to the executor, who must then apply a sum against administration liabilities proportionately, before distributing to the named beneficiaries?

All thoughts gratefully received.

Rhoddy McGrigor
McMillan Williams

Hi Rhoddy,

The shares ought to be transferred first to the executors of the will first: -

Article 27: New Model Articles:

27.—(1) If title to a share passes to a transmittee, the company may only recognise the transmittee as having any title to that share.

“Is there any reason why the executor cannot appoint new director/s (model Articles are adopted)”

Yes they can:

(2) In any case where, as a result of death, the company has no shareholders and no directors, the personal representatives of the last shareholder to have died have the right, by notice in writing, to appoint a person to be a director.

Share transfer to the executors.
Appoint a Director
Transfer the shares to the beneficiary.

Richard Bishop