What happens when the sole director of a company dies?

When faced with the problem of a company that lacks its main administrative body, the first thing to do is review the bylaws to see if they have established any particularity in case of death, as sometimes temporary substitutes are established. If the bylaws do not indicate anything, it may be necessary to resort directly to the Capital Companies Law. In most cases, the usual practice is that no mention is made of substitutes, simply because people do not usually think about the future death of the administrator when the company is being formed. 

At this point there is the urgent need to hold a meeting to sort out the situation and appoint a new active administrator to replace the deceased; however, there is the challenge of not having an existing administrator to call the meeting. In such cases, in the event of the death or termination of the sole director, of all the joint directors, of any of the joint directors, or of the majority of the members of the board of directors, without there being any substitutes, any shareholder may request the Court Secretary and the Commercial Registrar of the Registered Office to call a general meeting for the appointment of directors. In addition, any directors who remain in office may call a new general meeting for that sole purpose, and once called, proceed with the appointment of the new director at that meeting.

For those who require faster solutions, based on the circumstances, shareholders may have the option to meet in an extraordinary universal meeting with the only agenda item being the appointment of a new administrator to replace the deceased. This option may be given since it is possible for this type of universal and extraordinary meeting to be held without a call.

Of course, it is always important to communicate the loss to the affected administrations. And remember that in addition to this problem resulting from the loss of the administrator, there will likely be other open situations that must be resolved, such as, for example, the signing of the Deed of Acceptance and Allocation of Inheritance of the shares if it turns out that the administrator is also a partner.

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Macarena holds a law degree and a master’s in finance from Complutense University of Madrid, as well as a master’s in legal corporate advice from Garrigues. She specialises in commercial contracting, property investments, and legal defence, with international experience in the United States (New York) and Spain.