Upon the inheritance of company shares, the heirs acquire the right to receive the monetary equivalent of those shares. It is important to emphasise that the right of membership in the company is NOT inherited automatically. This means that the heirs do not become partners as of right. In order to be admitted as such, a special statutory procedure must be followed. The other partners, however, are entitled to refuse to admit the heirs as partners in the company.

Company shares in an EOOD and an OOD may be inherited both by operation of law and by will.
There are no restrictions on a will being made in favour of a person who does not meet the requirements for a partner or a sole owner of the capital. For example, if the will is made in favour of a minor child, the EOOD will be dissolved and the child will receive the monetary equivalent of its liquidation share. In the case of an OOD, the company will continue to operate with the remaining partners, and the child will receive the monetary equivalent of the shares bequeathed to it.

IMPORTANT!
Minor and under-age heirs may inherit company shares, but they CANNOT become sole owners of the capital or partners in the company.
Case law is categorical: membership in the company entails rights and obligations that cannot be exercised by a minor or under-age child, nor by their legal representative. The child is entitled only to the monetary equivalent of the inherited shares. If the child is the sole heir, the EOOD is dissolved and placed in liquidation. In the case of an OOD, the remaining partners will pay out the monetary value of the shares, but the child cannot be admitted as a partner.

Procedure for admitting heirs as partners
Heirs wishing to become partners must expressly declare their wish to do so and accept the terms of the articles of association. The remaining partners may vote in favour of their admission, but they are also entitled to refuse. In the event of a refusal, the share of the deceased partner may be:

  • taken over by another partner;
  • distributed proportionally among the remaining partners;
  • transferred to a third party, if this is possible under the articles of association.

If no one takes over the share of the deceased partner, the company’s capital must be reduced by its value.

Where one of the heirs is already a partner in the company, their admission as a partner does not require a new decision of the general meeting. For example, if a father, a son and a third party are partners and the father dies, the son does not need additional approval to be admitted as a partner; this will apply only to the remaining heirs.

Death of the sole owner of the capital in an EOOD
Upon the death of the sole owner, the heirs must take a decision on continuing the company’s activity. An EOOD may become an OOD if more than one heir decides to continue the activity. If not all heirs wish to participate, only those who so wish become partners, while the others receive the monetary equivalent of their shares.

The heirs may also choose other ways of settling their relations, such as:

IMPORTANT!
Upon the death of a partner or sole owner of the capital, co-ownership arises between the heirs over the company shares.
This means that the heirs receive notional (ideal) portions of the shares according to their inheritance rights. For example, if a partner owns 10 shares and has two heirs, each of them receives a 1/2 notional portion of each share, rather than 5 shares each. This co-ownership may be terminated by:

Monetary equivalent of the inherited shares
The value of the inherited shares is determined on the basis of the accounting balance sheet as at the end of the month in which the partner’s death occurred. There is no fixed time limit within which the company is obliged to prepare the balance sheet or pay out the value of the shares. If payment is not made voluntarily, the heir may bring a claim before the court.

IMPORTANT!
The payment of the share to an heir who has not been admitted as a partner is NOT subject to entry in the Commercial Register.

Upon the inheritance of company shares, the relevant changes must be entered in the Commercial Register. The type of changes and the documents required depend on the circumstances, such as:

  • the admission of the heirs as partners;
  • the presence of minor or under-age heirs;
  • the need to reduce the capital, and others.

If you need legal advice and protection of your inheritance rights, contact us on 0887550706 or by e-mail: [email protected]