Liability on legal heirs after diseased director of pvt ltd co.
Rohan Kulkarni
(Querist) 22 September 2013
This query is : Resolved
Sir/Mam
I Kindly request you to provide your qualitative & expert advise on this case :
Pvt Ltd co is in debt of BANK LOAN, CREDITORS DUES AND GOVERNMENT DUES,After demise of Director his shares of 50% in co. are get automatically transmit to legal heirs, their home is collateral security with bank for CC and having personal loan on plot and company is forcing family to come on board,QUEST ...1] whether co. liability shifts automatically on transmission of shares?2] whether family is answerable to BANK for loans 3] co. is badly in debts whether family can hold shares only w/o becoming director?? 4] whether creditors / government can take legal action on family on transmission of shares ? 5] whether family liable for private personal loan of diseased director .? 6] BANK has also seized private FD Saving a/c of family in that very bank , can bank do that legally?
Adv Akhtar Ali Sheikh
(Expert) 22 September 2013
The answer to first question is NO.
but will be liable to pay only to the extent of unpaid amount of share capital subscribed - which in your may have already been paid.
2nd Question : Answer is again no but only to the extent the share subscription amount remaining unpaid.
3. Holding the shares or not holding these --- the family members are not responsible for the ills of the company.
4. NO - if all the shares subscribed have been paid.
5. Family is not liable but assets left by him will be encumbered to service the debts incurred by the deceased.
6. If the FD was a collateral or a security for the loan then they can do it.
5.
Rohan Kulkarni
(Querist) 22 September 2013
Sir , Thanks a lot for your time and reply
1] all shares are fully paid up
2] Presonal FD are not linked
3] and there are no assets left only inhertied property is home& plot
4] there was no WILL of director
5] should we have to prepare succession agreement or indemnity bond to acquire shares and Collateral house and a plot, if we do so now family is liable to loan on that property??
if we succeed to replace collateral house with some adequate additional property , to claim home , should we make a succession agreemnt specifying home and plot ??
Rohan Kulkarni
(Querist) 22 September 2013
Also the CC is with co-operative bank and personal guarantee is given by the deceased director. In this case can bank also claim personal assets of legal heirs for company debt.
Rohan Kulkarni
(Querist) 22 September 2013
Will the legal heirs be required to give personal guarantee to bank?
Raj Kumar Makkad
(Expert) 22 September 2013
The personal assets of the family members cannot be seized by banker for the recovery of unpaid amount of the company. On demise of the director, his share shall not automatically vest in his legal heirs till clearance of unpaid debts of his share so proportionately his share shall be adjusted against the liabilities and remainder, if any shall only go to legal heirs.
Guest
(Expert) 23 September 2013
Mr. Rohan,
To be frank, yours is merely an academic query.
Based on your theoretical and academic type of query, without discussion of the real problem, the discussions can get stretched to too much confusing extent that, even yourself being a company secretary, you would get confused to be able to sort out the real solution to the problem, when you are feeding the information in bits and piecemeals.
Your query reveals as if the company was held solely by a single director, which cannot be. What about other dirctors and their assets?
You have also not made any mention about the amount of share of debt of the deceased director, value of shares liable to be inherited by heirs, property with inheritance from which level of ancesters as you treat the property as ancestral, whether the home as collateral security belonged solely to the deceased director and whether any neir was also made party to the agreement when the home was pledged as collateral security, etc., etc.
In fact you need to consult a local lawyer by showing him the documents pertaining to the loan/ agreement, secutity instruments, etc.
Moreover, the company or the heirs of the deceased can well afford to hire the services of an expert to handle the issues, if they don't want to lose the assets of the deceased on account of ignorance or half or partial feeding by reply to your casual queries.
Rohan Kulkarni
(Querist) 23 September 2013
Respected SIRs
I sincerely do not want to waste any of your time. I am one of the relative of legal heirs and I do not hold good practical experience as CS. so this is not a academic query.
I have raised few question , which were bothering Us, As I wanted to confirm the status of liability on legal heirs only.
If It is necessary , I will definitely provide adequate information regarding this for your perusal.
I Understand , my piecemeal queries may create confusions , so i sincerely request random questions from the expert so that I can provide necessary information.
Reply to N. Rajkumar sir,
1] The Home as collateral is on the name of deceased director only.[ also the plot]
2] Deceased director has given a personal guarantee to all his loan to the bank.
3] This company group consist 3 pvt ltd co.In one of the CO. , relative of both directors were directors, even the legal heirs in this case were director[ not holding any shares, only for the name sake, we have already filed resignation before the demise of director , but the co has not filed any FORM 32 to ROC yet ].
Rohan Kulkarni
(Querist) 23 September 2013
This company consist of 3 pvt lt companies ,
having majorly two director [ 50% each] and same both in each company. One of both director is deceased. other's director home and plot is also mortgaged with bank , relatives of both the directors are directors in one of the 3 co.Also legal heirs in this case were Non-Executive directors[ for the name sake ] we filed resignation before 15 days of demise of directors, now we are demanding filing Form 32 to ROC, But the company is denying and forcing legal heirs to be on the board in place of their father's name, As a CS i know only that , if they become directors they may have to sign loan guarantees and some personal guarantees. Also the company is not going well, even if it liquidates its having deficit of 1cr or more, so my advise to my relative is not to take part on Board [ bcoz of Liability , incapability as both legal heirs are ladies and lack of technical reason.] instead to be as shareholders.
Legal heir's wealth is zero now , 90% of LIC policies are assigned to the CO-OP Bank, only they have is FD on their name.and the same were seized by bank. as bank asking for companies decision first.
in this case , What stand is preferable ?
1] whether to surrender all shares
2] whether to request personally to bank for release and replace of collateral with company's one mortgage free security.
3] whether to be director temporary , will this leads to signing of personal guarantee to all liabilities?
After this if you still suggest local lawyer to be consult I will not hesitate to stop discussing this issue for this case here.
Thanking you for your Time and Replies.
ajay sethi
(Expert) 23 September 2013
it is better you consult a local lawyer
Rajendra K Goyal
(Expert) 23 September 2013
Consult Legal Adviser and show him all the documents.
Guest
(Expert) 23 September 2013
Mr. Rohan,
Please note one crucial point, the liability of the shareholders to creditors of the company is limited to the capital originally invested or guarantees given, i.e. the nominal value of the shares and any premium paid in return for the issue of the shares by the company and the guarantee in the shape of collateral security. A shareholder's personal assets are thereby protected in the event of the company's insolvency, but money invested in the company will be lost. To get the debt recovered, the bank can only get attached the shares of the deceased director, assets of the company and the assets kept as collateral security.
Bank cannot illegally sieze FD in private capacity of the heirs.
The heirs cannot also be compelled to accept the directorship of the company in place of the deceased director.
However, for the nitty-gritty of the strategic course of action on the part of the heirs as to how to tackle the issue, you would need to take a regular consultancy from any of the experts near your place. A long range of actions can neither be possible to be detailed on these pages, nor the nature of strategy would be in the interest of the heirs to discuss in the open forum.
Rest depends upon your own wisdom, as you are a CS as well as a budding CA.
Rohan Kulkarni
(Querist) 23 September 2013
Respected Sirs ..
I have understood the crux of your replies and also got aware that detailing need to be handled and consulted regularly with local experts.
As mentioned by Mr. N.Rajkumar Sir , I will arrange for sending legal notices to company and ROC for non-filing Form32 and also to bank for illegal seizing of FDs
Also as mentioned by Mr. PS Dhingra Sir, Liability is to the extent of shares hold [ but in this case amount of shares already paid/invested will be lost]that means no additional outflow i guess.
Only I can claim our collateral house on personal request to bank.or in replacement of additional security of company.
I sincerely appreciate your time and valuable replies for this case.In case of urgent requirement please consider my requests to solve my queries.
Thanking You...
Guest
(Expert) 23 September 2013
u r welcome.
Sudhir Kumar, Advocate
(Expert) 05 October 2013
expert willing to respond further to link fresh query at
http://www.lawyersclubindia.com/experts/Insurance-claim-money-of-a-deceased-director-426651.asp
