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:: Question :: My father is a founding shareholder holding 20% of ordinary shares of A Joint Stock Company, which was established in 2008. In early 2009, my father passed away without a will. Please kindly advise how my father’s shares of Company A will be dealt with? Is there any regulation in the Law on Enterprises that provides the heritance of such shares?
Answer:
Shares are capital contribution of shareholder in a joint stock company. When a shareholder dies, the share is considered as the inherited assets. In case a shareholder dies without a will, his shares shall be inherited by his heirs in ranks of inheritance pursuant in accordance with the laws on heritance.
There is no specific regulation in the 2005 Law on Enterprises providing heritance of shares in a joint stock company. Therefore, the heritance in your case shall be implemented pursuant to the 2005 Civil Code and the Company’s Charter (if any).
Pursuant to Article 676 of the 2005 Civil Code, it is understood that the shares shall be inherited for following rank of heritance:
- First rank of inheritance shall include wife, husband, biological father, biological mother, adoptive father, adoptive mother, biological children and adopted children of the decedent;
- Second rank of inheritance shall include paternal grandfather, paternal grandmother, maternal grandfather, maternal grandmother, natural brother(s) and sister(s) of the decedent; grand-children of whom the decedent is the paternal grandfather or grand-mother, maternal grandfather or grandmother;
- hird rank of inheritance shall include paternal and maternal great-grandparents; paternal and maternal uncles and aunts by blood of the decedent; nephews and nieces of whom the decedent is the paternal or maternal uncle or aunt by blood; great grand-children of whom the decedent is the paternal or maternal great grandparents.
Heirs belonging to the same rank of inheritance shall be entitled to equal portions in the estate.
Heirs belonging to the subsequent rank of inheritance shall be entitled to inheritance only if none of the heirs of the preceding rank of inheritance is left as they have died, are not entitled to the estate, are disinherited or disclaim the estate.
Therefore, heir(s) at law of the decedent shareholder must inform Company A about the heritance and will become founding shareholder(s) of the Company. In case any heir refuses to be a founding shareholder of the Company, he may transfer inherited shares to other founding shareholder or other person who is not founding shareholder if the General Meeting of Shareholder approves such transfer in accordance withArticle 84.5 of the 2005 Law on Enterprises 2005..
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