Passage of shares in a limited-liability company to a shareholder's legal successors
Provisions in the articles of association can pre-empt the application of inheritance laws to shares in a limited-liability company.
Shares in a limited-liability company pass to a shareholder’s heirs under the general rules for inheritance set forth in Poland’s Civil Code. The heirs become shareholders by operation of law at the time they take up their inheritance. The proof of acquisition of the shares is the order of the court confirming taking up of the inheritance, or the deed certifying the inheritance. As against the company, acquisition of the shares becomes effective upon notification of the company on taking up the inheritance and the shares. Notification is provided to the management board, with presentation of one of the documents mentioned, and must be recorded in the company’s share ledger.
However, it is possible to exclude the operation of inheritance law in this respect, pursuant to Art. 183 of the Commercial Companies Code. This is done by including relevant provisions in the company’s articles of association restricting or excluding replacement of a deceased shareholder by his or her heirs. Exclusion must apply to all heirs of the given person. Restriction, however, may apply to only certain heirs, for example by defining the characteristics that must be met by future heirs in order for them to join the company.
If a shareholder holds more than one share, the articles of association may restrict in a specific manner how the shares are distributed among the heirs.
If a shareholder may hold only a single share, it is permissible to split the share among heirs, unless excluded or restricted by the articles of association. The shares created by splitting the share may not have a par value below PLN 50.
It may also happen that a share or shares are assigned to heirs as joint owners. They will then hold joint rights to the shares and exercise their rights in the company through a joint representative. If no joint representative is appointed, declarations by the company may be made to any of the co-owners. The co-owners, in turn, are jointly and severally liable for any obligations associated with the shares.
The articles of association should include rules for paying off heirs who do not enter the company. Otherwise, the exclusion or restriction on assumption of share rights by heirs will be ineffective and the normal rules of inheritance law will apply.
Łukasz Śliwiński, Corporate Law Practice, Wardyński & Partners
