by Andria Papageorgiou

Company Law, CorporateAugust 30, 20240 comments

Announcement by the Registrar of Companies and Intellectual Property for Cases Where the Beneficial Owner Has Deceased

The Department of the Registrar of Companies and Intellectual Property (DRCIP), following an opinion from the Legal Service of the Republic dated 13/06/2024 on the above matter, provides the following guidance/instructions, as seen in the relevant announcement here.

CASES WHERE THE BENEFICIAL OWNER HAS DECEASED

Answers to specific questions:

1. Who is registered as the beneficial owner (BO) when there is no will and, consequently, no executor of the estate?
2. What happens if there is a will? Can the executor of the estate be registered as the senior management official until the process is completed?

   In cases where an administrator has been appointed but the administration of the estate has not been completed, the following may be registered for a period until the process is completed:

   i. The estate administrator as the senior management official of the company if they exercise control over the company through other means; or
   ii. The legal heir as the beneficial owner or as the senior management official.

When a person dies without a will, the Court authorizes one or more persons as administrators of the deceased’s estate, granting them letters of administration following a petition by these persons, which is called an application for administration without a will attached. Similarly, when a person dies leaving a will, this will is probated (see Article 14 of the Administration of Estates Law (CAP. 189)), following an application by the persons named as executors of the will or by other persons entitled to the grant of probate or the receipt of letters of administration with the will annexed.

With the granting of letters of administration or the issuance of probate, as referred to above, the administrator or executor becomes the deceased’s personal representative and is considered a trustee of the deceased’s movable and immovable property. As such, they constitute the natural person who “has ultimate control” according to the definition of “beneficial owner” in Article 2 of Law 188(I)/2007 (it should be noted that the situation where the ultimate ownership or control of the legal person is held through a trust at a percentage exceeding 25% of the shares or voting rights or ownership rights of the said legal person is different).

Therefore, when there is no will, and an administrator has been appointed, or when there is a will, and an executor of the deceased’s estate has been appointed, they constitute the beneficial owners as the natural persons who have the ultimate control of the company as long as they retain this capacity concerning the specific assets of the company (i.e., the shares).

The above is subject to the provisions of Article 27 of CAP. 189, which provides for the direct inheritance to the heirs, in special cases (even though no letters of administration of the estate have been granted), in which the beneficial owners become the heirs of the deceased who inherit, as the natural persons who have the ultimate ownership status (it should be noted that in practice, the procedure of Article 27 of CAP. 189 is applied only in cases where the value of the estate does not exceed 6000 pounds).

Who is registered as BO when there is no appointed estate administrator and no heirs?

According to Article 47 of CAP. 195, “if there is no person alive who is related to the deceased up to the sixth degree of kinship at the time of death, the deceased is deemed to have died intestate,” and “subject to the share of any surviving spouse, the intestate part of the estate and the undistributed part of the estate become the property of the Republic.”

Nevertheless, in response to the query, the non-filing of an application and non-issuance of letters of administration, and therefore the non-appointment of a personal representative (and non-transfer of the estate to the Republic) imply that “no natural person with ultimate ownership or control of the legal entity” can be identified. Therefore, the beneficial owner in this case is “the natural person holding a position of senior management official,” according to the definition of “beneficial owner” in Article 2 of Law 188(I)/2007, unless Article 27 of CAP. 189 applies (see point 3 above).

Who is registered as BO when no estate administrator has been appointed, there are no heirs, but the deceased has minor children and a spouse?

Without the issuance of letters of administration and the appointment of a personal representative when the deceased left behind heirs (i.e., a spouse and children), the beneficial owner is “the natural person holding a position of senior management official,” according to the definition of “beneficial owner” in Article 2 of Law 188(I)/2007, since no natural person can be identified as a beneficial owner under paragraph (a)(i) of the definition, unless Article 27 of CAP. 189 applies.

Who is registered as BO in an entity when the sole officer (director, secretary) and beneficial owner has died, and there is no will or estate administrator?

In the event of the death of the sole shareholder and officer of a company, and if no letters of administration have been granted, and there is no “natural person holding a position of senior management official” as this can be interpreted under the provisions of Law 188(I)/2007, there is, in fact, no natural person within the meaning of “beneficial owner” in Article 2 of Law 188(I)/2007, and it follows that the company is not conducting business or operating.

Note:

In every case, any relevant provision in the company’s Memorandum and Articles of Association or the application of other legislation depending on the particular facts should be considered.

In case you have any questions, please do not hesitate to contact us for further professional assistance.

Disclaimer: The information contained in this article is provided for informational purposes only, and should not be construed as legal advice on any matter. Andria Papageorgiou Law Firm is not responsible for any actions (or lack thereof) taken as a result of relying on or in any way using information contained in this article and in no event shall be liable for any damages resulting from reliance on or use of this information.