Where There Is A Will - Transmission Of Shares By Operation Of Law

Companies have two options when it comes to raising capital - debt or equity. Equity involves issuing shares, which are ownership rights, benefits, and resources issued by a company...
Ghana Corporate/Commercial Law
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Companies have two options when it comes to raising capital - debt or equity. Equity involves issuing shares, which are ownership rights, benefits, and resources issued by a company to a person for consideration either in cash or otherwise than in cash1 .

These shares are the property of the shareholder and can be transferred to another person subject to any valid restrictions provided in a Shareholders Agreement, if any, the Company Constitution and/or any relevant documents.

Acquisition of Shares

There are four ways to acquire shares :2 subscription at incorporation, subsequent purchase from the company, share transfer from existing shareholders, and transmission by operation of law.

The latter refers to a transfer premised on the death, bankruptcy, or insolvency of a shareholder. In the case of the death of a shareholder with a will, it is important to follow the appropriate process for the transmission of shares. Understanding the legal requirements for this process can help ensure a smooth transfer of ownership.

Transmission by Operation of Law: in the instance of the death of a testate shareholder

Transmission of shares by operation of law upon the death of a testate shareholder is an important legal process that must be followed. It is effected without consideration paid by the transferee.

Section 102 (1) of Act 9923 outlines the steps that a company must take to recognize the legal representative of a deceased shareholder. This includes recognizing the survivor(s), personal representatives, or a beneficiary vested with the shares of the deceased shareholder.

However, it is important to note that this recognition is not an automatic and the Company must undergo some processes in order to register the shares in the name of the beneficiary. Recognise legal representative of a deceased shareholder before final registration in the name of a beneficiary.

The Recognition Process

Upon the death of a shareholder, the relevant executor is required to apply for probate which grants authority to deal with the estate of the deceased (including the shares).4 This includes disposing or transferring shares of the deceased according to the Will of the deceased.

Once probate is obtained by the executor, the original or certified true copy must be submitted to the company for acknowledgment and registration. 5

Subsequently, the executor is granted access to either elect for the shares to be registered in their own name pending distribution to the beneficiaries, or immediately transfer the shares to the beneficiaries.

It is important to consider what occurs between the duration of a grant of probate and the registration of a new shareholder in place of the deceased and/or the ultimate transfer of the shares to the named beneficiary.

Section 102 (4) of Act 992 stipulates that the personal representative is entitled to the dividends, interest, and other advantages that the deceased shareholder enjoyed preceeding his/her death.

The personal representative acting on behalf of the estate of the deceased would also be entitled to the rights and remedies enjoyed by the deceased shareholder. It is imperative to state that there is a possibility that the liability of the deceased shareholder may be enforceable against the estate of the deceased shareholder notwithstanding whether or not the shares in question have been transferred or forfeited.6

The rights enjoyed in the recognition phase are exclusive of the right to attend and vote at meetings of the company. This right may only be enjoyed by a duly registered shareholder whose shares generally have unrestricted voting rights in respect of the relevant subject matter being voted on.

On the part of the Company, it may at any time give notice requiring a personal representative or beneficiary to elect to be registered personally or to transfer the shares. If the notice is not complied with within ninety (90) days, the company may suspend payment of dividends, interest or any other moneys payable in respect of the shares until the requirements of the notice have been complied with.

Registration Process by the Company

  • The Beneficiary must present the Company with a duly executed Vesting Assent;
  • A share certificate would be issued in the name of the Beneficiary and the new shareholder's details will be entered into the Register of Members.
  • Consequently, a new shareholding structure would be prepared for subsequent filing at the ORC.
  • The following documents are to be filed at the Office of the Registrar of Companies (ORC): The Vesting Assent, Special Resolution Form, and a copy of the Share Certificate.

Following the approval of the ORC, the Company's Profile will be updated. Where the deceased shareholder was a party to a Shareholders Agreement, the Beneficiary may be required to sign a Deed of Adherence to undertake the obligations and rights that the deceased shareholder held.

It is important to state that registration as a shareholder does not attach additional rights to the shares in question which did not exist when the deceased shareholder held them. For instance, where voting rights attached to the shares in question were restricted at the time of purchase by the deceased shareholder, transmission by operation of law does not vary the nature of the shares transferred.

Protection of the Beneficiaries

Under section 103 of the Companies Act, measures are put in place to safeguard the interests of individuals who have a stake in the shares of a deceased shareholder, aside from the appointed administrator. This provision permits a person with an interest in the shares of a company to serve the company with either a Charging Order or a Stop Notice with an affidavit pursuant to Order 49 of the High Court Civil Procedure Rules, 2004 (C.I 47).

Upon receiving the notice, the company is obligated to record it in the register of members. Consequently, the company is prohibited from making any payments or transfers of shares that contradict the terms specified in the notice until its expiration.

Should the company fail to adhere to the requirements outlined in the notice, it becomes liable to compensate individuals who are adversely affected by such non-compliance.

This provision serves to ensure that the interests of all relevant parties are duly protected and respected.


In the event of a shareholder's death, the rights, obligations, and the liabilities of their shares are not automatically transferred to the executor of the will.

To gain access to some benefits, the executor must provide the company with an original or certified true copy of the probate. However, this recognition phase does not include the right to vote or attend meetings. To fully enjoy the rights and obligations of a shareholder, it is essential for the beneficiary to take steps to be registered as a shareholder of the company in place of the deceased shareholder.


1. Corporate Governance Institution Foundation Programme Textbook - Second Edition; page 88

3. Companies Act 2019 (Act 992)

4. High Court (Civil Procedure) Rules, 2004 (CI47), O. 66

5. Corporate Governance Institution Foundation Programme Textbook - Second Edition;

6. Act 992, Section 40

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

Where There Is A Will - Transmission Of Shares By Operation Of Law

Ghana Corporate/Commercial Law


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