No. The death of a shareholder does not invalidate the shares they held. These generally form part of their estate and are transferred according to their will or, in the absence of a will, according to the rules of inheritance provided by law, subject in particular to applicable purchase or redemption mechanisms.
The other shareholders do not automatically become owners of the deceased's shares. Subject to applicable laws and the company's current documents, the estate or heirs may acquire rights to these shares.
Before proceeding with the repurchase or transfer of shares, it is recommended to review the company's articles of association and any shareholder agreements containing buy-sell clauses. These documents may include provisions such as:
These mechanisms are aimed in particular at ensuring the continuity of the company, regulating the fate of the deceased's shares and, according to the applicable provisions, preventing the unwanted entry of new shareholders.
Once the rights and obligations of the parties have been determined, the required corporate formalities must be completed. Depending on the circumstances, this may include documenting the purchase, redemption, or transfer of shares, updating the securities register and other corporate registers, and providing the information required by the relevant authorities.
In summary , the death of a shareholder does not automatically terminate their rights in the company through share ownership, nor does it invalidate the shares. Shares generally form part of their estate, but their purchase, redemption, or transfer may be governed by the articles of association, a shareholders' agreement containing buy-sell clauses, or applicable laws. It is therefore recommended to review the company's current documents before taking any action.