Why you need a Will for your business

A 50 year old family farming business is to be wound up and sold by order of the High Court due to a family dispute.

The Society of Trusts and Estate Practitioners reports the case after the High Court ruling in February 2014. Brian Harding incorporated the family farming business with his father in law more than 50 years ago. His father in law had in due course transferred his shares to his daughter, Jane (Brian Harding’s wife). A subsequent transfer of a substantial amount of shares was later made to the couple’s three daughters Sally, Rosemary and Elizabeth.

Brian Harding died in 2001 leaving most of his shares in the family business to a family trust. Sally, Rosemary, Elizabeth and Jane were appointed as directors of the business. Elizabeth took over the day to day running of the business and her husband, Esmond, was the company accountant and also trustee of the family trust.

In 2007 Sally objected to Esmond’s prominent role as company accountant and his role as trustee. Tensions had started to rise in the family and four years later Sally and Rosemary decided that they wanted an independent accountancy firm to replace Esmond. An agreement was reached, however, Esmond proved to be uncooperative in handing over company records.

Various other family issues arose including a dispute regarding the valuation of the shares of the family business and the fact that Sally and Rosemary were involved in application to be their mother’s attorneys without consulting Elizabeth.

The escalation of the disputes resulted in two rival company meetings being held at the same time in different places. Elizabeth and Edward attended one meeting where they voted unanimously to appoint Esmond as a director in place of Sally and Rosemary. Insolvency Act proceedings were brought by Sally and Rosemary to wind up the company on the grounds that it could not be managed.

The High Court ruled that the business had to be wound up on the basis that Sally and Rosemary held 32.5% of the shares which was more than Elizabeth’s share.

This case highlights the importance of making a Will for your business. If you would like further advice on this matter please contact Tom Rodgers, a specialist private client solicitor in Wakefield. Tom can be contacted by email at tomrodgers@chadlaw.co.uk or by telephone on 01924 379078.