Transfer of a share by inheritance in an LLC

A limited liability company is the most common form of organization of activity at present. Shares in it can be inherited in the standard manner, but there are some nuances that can create difficulties in obtaining an inheritance. How does the inheritance of a share in the authorized capital of an LLC occur in 2018?

Features of inheritance

The nuances of inheriting a share in an LLC depend on whether permission from the founders is needed to join the ranks of owners. If the company’s charter documentation stipulates that the consent of the remaining owners is not required to inherit part of the company, then the procedure is significantly simplified. The heir simply needs to visit a notary and start processing the inheritance.

But such a development of events is extremely rare. The overwhelming majority of organizations include in their charter a clause on the mandatory receipt of consent from other founders for a new person to join their ranks, including through inheritance.

To receive it, the heir will need to send an offer to the LLC and letters to each owner. Within a month, the owners must respond in writing. The decision can be either positive or negative. If the transfer of the share is approved, the heir can only re-register the property in his own name by contacting the Rosreestr branch.

If the meeting of owners decides to refuse the heir, he has the right to request reimbursement of the cost of the share due to him. In this case, the founders have no right to refuse. The heir also has the right to compensation in kind.

Grounds for inheritance

You can inherit a share in an LLC on the same grounds as any other property - by law and by will. The first method means that the share is transferred to the relatives of the deceased in accordance with the norms of civil law.

Inheritance by will is the simplest, because the citizen himself specifies in it who exactly needs to transfer the share in the LLC after his death. At the same time, the circle of heirs expands significantly, because the testator has the opportunity to indicate not only a relative, but also any other person.

There are also a number of persons who are classified as obligatory heirs. They receive their share regardless of whether inheritance occurs by law or by will. These categories include the following:

• Minor children.
• Disabled parents.
• Other people who were dependent on the deceased before his death.

Even if the testator does not write down the names of the compulsory heirs in the will, they will still receive their share, and the remaining part of the property will be distributed among the heirs specified in the last will. Therefore, the testator should immediately include mandatory heirs in the will.

How to receive an inheritance?

The procedure for entering into an inheritance in the form of a share in an LLC is no different from accepting an inheritance for an apartment, land and other types of property. Therefore, the first thing the heir must do is visit a notary’s office.

You must have with you an application with a request to accept the inheritance and issue a certificate, as well as a package of documents, which includes the following:

• Passport.
• A certificate confirming the last address where the testator lived.
• Death certificate.
• Papers certifying the existence of a family relationship with the deceased.
• LLC Charter.
• Documents of title for a share in the organization.
• List of founders.
• An appraiser's opinion on the value of the property. The heir can choose a company for evaluation at his own discretion.

The notary will check the submitted documents and issue a certificate of inheritance. After receiving it, the heir can already contact the founders and re-register the share in his name or take monetary compensation.

Appointment of a manager

Until ownership of a share in the LLC is registered, someone must manage this property. To do this, the notary looks for a person and concludes an appropriate agreement with him. The manager has the ability to perform all the actions that are necessary to run the affairs of the company.

The agreement spells out in detail what powers this person has and what decisions he has the right to make.

The manager is vested only with the right to manage the share, but not to dispose of it. Therefore, he has no right to sell, donate, bequeath or make other transactions with the property entrusted to him.

Subtleties of inheriting a share in an LLC after the death of one of the participants and receiving part of the authorized capital

The topic of inheriting a share in the authorized capital of a Limited Liability Company is now being raised much more often, since the number of LLCs is growing exponentially, and the death of one of the owners cannot be predicted in advance.

However, both the remaining owners of the company and applicants for his inheritance are interested in the fate of the deceased’s share in the authorized capital.

To clearly understand who can inherit corporate rights and how to transfer them to the heir, it is necessary to study certain nuances of this process.

Grounds and conditions for transferring a share to an heir

But the legislation provides that the legal heir will still receive what is due to him, in one form or another.

Three possible situations are assumed:

• the heir enters into a share, and the consent of the participants is not required;
• to obtain corporate rights, the consent of the founders is required;
• The charter of the LLC prohibits the transfer of shares to heirs.

What categories of persons can count on this?

The closest relative of the deceased, or the person specified in his will, can inherit corporate rights. If there was no will or it does not say about the fate of the founder’s corporate rights, then this is determined only in accordance with the Civil Code of the Russian Federation.

Read more about inheritance by law and the order of inheritance of shares under a will here, and in this material you can learn about how shares in an inheritance are distributed according to law and will.

The procedure for obtaining part of the authorized capital of an LLC

If entering into an inheritance does not require the consent of the owners and there are no prohibitions in the Charter, then corporate rights are transferred to the closest relative or the person specified in the will automatically. But first, certain conditions must be met.

As in other cases of inheritance, you need to contact a notary.

He needs to submit a certain package of papers:

• identification;
• document about the last place of residence of the deceased;
• confirmation of the fact of death;
• confirmation of family ties with the deceased (marriage or birth certificate);
• will;
• LLC charter;
• confirmation of the deceased’s corporate rights;
• list of LLC owners;
• a document confirming payment by the deceased of their share.

The notary will only accept the Charter as amended, which was in force at the time of opening of the inheritance.

In addition to the above documents, you must also bring a report on the cost of the share in question. To obtain it, it is necessary to conduct an assessment. It is carried out by experts within 1-5 working days. The procedure is paid, and to carry it out you will need to collect the following package of documents and provide it to the expert group:

• LLC charter;
• certificate of ownership of the deceased's share;
• balance sheet of the Company for the last 3-5 years;
• a list of the deceased's assets on the company's balance sheet.

Valuation of a share in the Company is a mandatory procedure, since it is on its basis that the amount of state duty is calculated.

Ownership registration process

As soon as the full package of papers has been collected, you can begin to register ownership.

The actions of the heir in such a situation should be as follows:

1. First of all, you need to go to the notary with a complete package of all the above papers. At the notary, the heir submits an application indicating that he accepts the inheritance. It also specifies the requirement for the issuance of a certificate of one’s right as an heir.
2. It is necessary to inform the LLC participants of your intention to obtain the corporate rights of the deceased. You can notify either in writing or in any free form.
3. You should definitely notify the tax office. To do this, the person claiming the inheritance writes an application and submits it to the Federal Tax Service. A document in form P14001 is required to make changes to Rosreestr.
4. The heir must write an application for making changes to Rosreestr. The statement indicates the reason - a change in the composition of the founders of the LLC. Along with the application, you should bring the certificate received from the notary to the Unified State Register of Legal Entities.

What do you need to know about making changes to the Unified State Register of Legal Entities?

The heir can receive corporate rights only after receiving confirmation from the Unified State Register of Legal Entities that the changes have already been made. Until this moment, the composition of the founders is uncertain. While the list of founders is uncertain, a trustee can manage the share of the deceased, in accordance with the procedure established in Article 1173 of the Civil Code of the Russian Federation.

• Article 1173 of the Civil Code of the Russian Federation. Trust management of inherited property
• If the inheritance includes property that requires not only protection, but also management (enterprise, share in the authorized (share) capital of a business partnership or company, securities, exclusive rights, etc.), a notary in accordance with Article 1026 of this Code as the founder of trust management enters into a trust management agreement for this property.
• In the case where inheritance is carried out under a will in which an executor of the will is appointed, the rights of the founder of the trust management belong to the executor of the will.

According to Art. 8, Federal Law of the Russian Federation, Unified State Register of Legal Entities makes changes to the state register within five working days. The heir will receive a paper confirming that the changes have been made one day after the expiration of this period.

Of course, obtaining corporate rights will not come without additional financial costs. In addition to the fact that the applicant for the inheritance will have to pay for an examination to determine the valuation of the share, he is not exempt from paying state duty. It is calculated as a coefficient of the assessed value. In addition, its size also determines the degree of relationship between the deceased and the heir.

Close relatives (children and parents) must pay 0.3% state duty on the value of the deceased’s share. At the same time, the payment should not be more than 100,000 rubles. Heirs of other degrees of kinship pay more - 0.6%. But even in this case, the payment amount cannot exceed 1,000,000 rubles.

The overwhelming majority of modern companies draw up a Charter, indicating that in order to accept the heir of one of the founders into the ranks of the owners of the LLC, the consent of each of the current owners will be necessary. This policy regarding the transfer of corporate rights by inheritance gives businessmen the opportunity to prevent an incompetent person from joining their ranks.

Even if the owners of the LLC have given their consent to the transfer of rights, they can limit the functions of the heir as one of the founders of the company and prohibit him from performing certain operations. Thus, they exclude the possibility that a person who is unaware of some of the intricacies of the company’s work will be able to influence its activities.

In this case, the procedure for obtaining a certificate remains unchanged, as does the list of documents required for this procedure.

But there is a difference - in this case, a certificate from a notary will not be a valid reason for automatically accepting the heir into the ranks of the owners of the company.

You will have to send a proposal to all owners to conclude a transaction. The document is drawn up with the participation of a notary and certified by him. Shareholders to whom the document was sent must agree or refuse your participation in the LLC in writing within one month from the date of receipt of the document.

The decision of the founders must be indicated in the minutes of the meeting. Based on this protocol and the consent of the owners (in writing), the heir formalizes ownership of the share.

What to do in case of refusal?

Of course, there is also the possibility of refusal. For such an outcome, even one negative decision on the part of the owners will be enough. But even in this case, a relative of the deceased cannot simply lose any rights to receive an inheritance.

In this case, the legislation gives him the opportunity to receive monetary compensation in the amount of the full value of the deceased’s share in the authorized capital. To receive this payment you must:

1. submit an application to the owners of the company. It must indicate that you want to receive payment for the value of the share, since, according to the Charter or the decision of the owners, you cannot use your corporate rights for their intended purpose. The decision on compensation will be made at a meeting of the company's owners.
2. Determine the full value of the deceased's share. This can be done by the company's accountant, based on the reporting for the last period, during the life of the deceased participant (according to clause 5, article 23 of the Federal Law).
3. Present papers that confirm your right to receive an inheritance.
4. Receive payment.

What to do if a ban is imposed?

In the event of a ban, a different development of events is impossible. Of course, formally the share belongs to you, but you cannot dispose of it. The only option left is to receive a refund. In essence, this is the purchase of a share from the heir, at cost. After this, it is redistributed. A decision on this must be made by convening a general meeting of founders.

It is carried out no later than a year after the transfer of rights. After redistribution, changes are made to the registry. The company must register the changes by filing an appropriate application with the registration authority. Attached to it is the death certificate of the former co-founder and an extract from the minutes of the meeting.

And the founders can choose the method of redistribution independently:

• distributed evenly between each owner.
• You can sell the share to a third party or LLC member (there may be several buyers), but this option is only feasible within 30 days from the date of purchase of the share from the heir.
• It is extinguished. The share is redeemed if the total amount of the authorized capital decreases by the amount of its value.

Inheritance of a share in the authorized capital of an LLC after the death of one of the participants: procedure, registration procedure, necessary documents

A limited liability company is the most common organizational and legal form in which Russian small enterprises are formed and operate. Medium and even large businesses are also often organized as LLCs. Unfortunately, this OPF is also the most popular among fly-by-night companies, whose existence is fleeting and has non-legal purposes.

Nevertheless, honest business exists in Russia and is aimed at long-term existence, constant development, and building reliable, sustainable enterprises. The owners of such organizations are interested in forming the continuity of generations. In these conditions, a pressing issue is the inheritance of a share in an LLC after the death of one of the participants.

A businessman who expects to pass on his business to children or other reliable people begins to prepare them from the very beginning (as soon as possible). After receiving their education, the “golden youth” are included in the Society’s membership or enter the top management.

Share in the authorized capital of LLC

It is not uncommon for a business to suddenly lose its owner (or one of them), and the transfer of the helm is carried out after his death. This is where the rules of inheritance law come into play. In this article, we will analyze in more detail the algorithm of actions in the case when it is necessary to transfer a share in an LLC by inheritance.

Ownership of a business formed in the form of a limited liability company is carried out through a share in the authorized capital. The nominal amount of the authorized capital is indicated in the Company's Charter.

It can also be viewed in the extract from the Unified State Register of Legal Entities on the official website of the Federal Tax Service. In the case of a single participant, the share is one hundred percent, and when the enterprise has several owners, it is expressed as a fraction or percentage.

A share has a nominal value and an actual value. The nominal value corresponds to the part of the authorized capital proportional to the interest owned by the participant. Valid is determined according to accounting data and expresses the real value of the enterprise.

The transfer of a business is carried out by transferring a share from one person to another.

There are various ways of this alienation:

• sale;
• donation;
• exit from the LLC with the transfer of shares to the Company;
• inheritance.

The first three options are quite ordinary, their procedure has been worked out and clearly regulated.

As for the right to inherit a business, certain procedural issues arise here that have not found clear regulatory regulation, which will be discussed later in this article.

A limited liability company should not be confused with other forms of organization, such as a cooperative or a joint stock company. In the first option, ownership/participation is carried out through a share, and in the second - through shares.

Grounds for inheriting a share after the death of a member of the Company

Any legally significant event gives rise to certain legal consequences. Inheritance of a share in the authorized capital of an LLC is associated with the event of the death of the testator and is based on certain documents.

The composition of these documents depends on the initial data and conditions under which succession occurs:

• are there any heirs, what is their number;
• whether a will was drawn up;
• what is the content of the Company's Charter.

Depending on the answers to the above questions, one or another action plan is outlined.

Inheritance of a share in an LLC by law

The Civil Code of the Russian Federation establishes the rules for the distribution of inheritance among the relatives of the deceased. The basis for the division of inheritance according to the law by the rule-makers is the principle of degree of kinship.

The queues are arranged in a descending line:

Queue	Compound
1st	the closest relatives are children and parents (spouses are not blood relatives, but they are also identified primarily as heirs);
2nd	brothers and sisters, nephews, grandparents;
3rd	aunts and uncles, cousins;
4th	great-grandparents;
5th	cousins ​​and granddaughters, grandparents;
6th	great-great-grandsons and great-granddaughters, nephews of uncles and aunts;
7th	Stepsons and stepdaughters, stepfather and stepmother.

Applicable to business inheritance, the first three stages are very real heirs. While distant relatives after the fifth stage rarely learn about the death of the testator or are not active.

Elderly people also do not agree to inherit the enterprise and, accordingly, do not enter into inheritance, due to the fact that participation in the Company is more of a responsibility than property benefits.

To manage an enterprise you need to have a lot of strength and energy, and therefore, inheritance by law is not the preferred way to transfer the business.

Inheritance of a share in an LLC by will

The most reasonable and expedient way to transfer the Company (or part thereof) to a third party in the event of the death of a participant is by will.

This option has the following advantages:

• a member of the Society can choose a successor during his lifetime and prepare him for upcoming tasks and functions;
• a will allows you to bypass the legal order and transfer the reins of the business to any worthy relative or other person;
• When drawing up a will, you can agree in advance on the candidacy of the future co-owner with the other participants of the LLC, which will avoid possible controversial situations and the refusal of the co-founders to transfer the share to the heir.

Thus, in a situation with inheriting a share in a limited liability company, a will removes many problems. This method of transferring inherited property is the most correct and consistent for those who are interested in preserving the business and the smooth entry of their successor into it.

Deadline for accepting inheritance

There is no special deadline for inheriting a share in an LLC. It is the standard 6 months established by law.

During this period, it is necessary to accept the inheritance (enter into it) by one of two actions or both of them:

1. Documented (submit a completed application to a notary).
2. In fact (start using property from the inheritance mass).

• It should be noted, however, that despite accepting an inheritance through the use of one thing or another, contacting a notary office is necessary in most cases.
• Moreover, when inheriting a share, the beginning of using this type of inheritance is very doubtful until a certificate of inheritance is received and a change of participants is registered in the Unified State Register of Legal Entities.
• An important nuance regarding the timing of the main actions during business succession is the moment the heir contacts the Company with a notification of his intention to become a member.

There is no specific deadline established at the legislative level. At the same time, taking into account logic and expediency, this must be done not earlier than the end of the deadline for identifying all heirs (to eliminate unnecessary “movements” in the event of new applicants appearing after the application), but also without delay (so as not to let the company slip out of control).

The procedure for registering inheritance rights to a share

No one can interfere with the inheritance of a share in the authorized capital of an LLC. But for the heir to become one of the founders of the Company, it may not be as easy as it seems.

It would seem that after receiving a certificate of the right to inheritance, a person already has one foot in the general meeting of participants. But that's not true.

The law provides for cases when company owners have the right to restrict the entry of unauthorized persons.

There are no restrictions in the charter

Despite the possibility of establishing restrictions and prohibitions, not everyone uses this. Someone deliberately does not want to introduce them, while others simply do not pay attention to this right, approving a standard standard charter prepared by some legal office that provides support for the registration of legal entities.

There are no problems with joining the Society with only one participant. This is logical - when there are no co-owners, there is no one to object. Therefore, inheriting an LLC with a single founder is the simplest of all possible options.

Thus, when inheriting a share in an LLC after the death of a single participant, the Company can turn into a company with several owners.

If there are restrictions

If businessmen are picky and not indifferent to who they do business with, the Charter may stipulate requirements for obtaining prior consent for the heir/heirs of a deceased partner to become a participant. Such conditions must be clearly formulated. Expanded interpretation and “second guessing” of the rules are not allowed.

If the founders, when creating the Company, had the goal of limiting the entry of heirs, then this should be spelled out exactly like that. If only the need for consent is indicated for the sale of shares to third parties, this will not be an obstacle for the successor of the deceased participant.

To enter the company, the applicant (successor) must submit a corresponding notification to the address of the location of the Company.

If all co-owners agree, or none of them raises direct objections within a calendar month, the share will belong to the heir, and changes can be registered in the register.

If at least one is against it, then the company will no longer have to be managed. In this case, the material benefit of the heir will be to receive the actual value of the share within a year, or in a shorter period (if this is stated in the Charter).

When paying the cost of a share, there is a tax nuance. The fact is that this compensation is income. But there is no single position on whether this is income within the framework of an inheritance or not.

At the same time, there are explanations from the Ministry of Finance about both. Society faces a difficult choice. If we assume that receiving the value of the share is not inherited income, then the Company must withhold personal income tax payments from the amount. This may displease the heir.

If you competently defend your position, you can defend the correctness of any of the options, relying on the explanations of the financial department (they stated at different times that the opposite options were correct).

As you know, an action performed in pursuance of the clarifications of a government body is not subject to punishment. At the same time, it will be safer, simpler and cheaper for an LLC to withhold tax and then argue with the heir, rather than run into tax sanctions and sue the Federal Tax Service.

What to do if banned

If there is a direct prohibition in the LLC Charter on inheriting a share in its authorized capital, no other options are provided for how to buy off the heir.

After receiving an application from the owner of the share, according to the certificate of inheritance, the Company will have to pay the heir the actual value of his share, calculated in accordance with the current legislation (more about this later in the text of this article).

There is, however, one more fallback option. There are situations when the partners of the testator know the person whom the latter has chosen as his successor.

Perhaps such a person is even potentially capable of bringing benefits to the company, and, despite the prohibition in the Charter, the co-owners of the business want to see the heir in their ranks.

In this case, while the inheritance registration procedure is underway, the Company’s participants can convene a General Meeting and decide to amend the Charter and remove the previously established ban. Thus, the problem will be resolved, and there will be no obstacles to entering the governing coalition.

Age limit

Managing a company is for adults. Ownership of the Company by an heir if he is a minor seems very difficult. This situation is quite likely if there is no will and the deceased has small children.

However, lack of full legal capacity due to age does not prevent the inheritance of a share in the authorized capital. In this case, the way out of the situation is seen in trust management or performing functions through a guardian until the age of 18.

LLC valuation for inheritance registration

In a situation where the Charter of a limited liability company contains restrictions on the entry of an heir and there are dissenting partners, as well as when there is a direct prohibition in it on inheriting a share in the authorized capital of this Company, the need arises to pay the heir/heirs the actual value of the share. This amount is calculated based on accounting data.

Despite the way the law defines “farm-out” in simple language, pricing has certain nuances.

The fact is that in a number of companies, in addition to accounting, there is also management accounting. In the first of them, assets and liabilities are formed in accordance with all PBUs in a strictly formal manner.

For example, there is such a thing as “depreciation”. According to its standards, any valuable property that has a formally useful life can be fully depreciated, that is, reflected in accounting at zero cost.

However, the real market price of such property can be quite a lot of money, and sometimes even exceed the purchase price (for example, very old but well-preserved real estate). In such a situation, to form a realistic picture, it is simply necessary to assess the market value of the share.

This assessment is essentially a reflection of the capitalization of the business. That is, it expresses the amount that the company is actually worth, and, accordingly, the share in it. Such an assessment is carried out by special companies (appraisal, auditing) that have appropriate membership in a professional SRO.

In practice, assessment can be difficult. All documentation necessary to determine the value of the business is kept by the Company.

The heir does not have access to it until he becomes a member of the management bodies of the LLC. But a priori he will not be a member of such bodies if it comes to paying the cost of the share (unless, of course, he simultaneously works in this company as a chief accountant or director). It turns out to be a vicious circle.

To open this chain, you have to resort to the help of the court. Disputes between heirs and companies are considered in a court of general jurisdiction.

A successor who does not agree with the amount of compensation offered to him may seek judicial protection of his rights and, during the trial, request the necessary documents and petition for an independent assessment (in the form of a forensic examination).

Conclusion and main recommendations

It is not easy to inherit the opportunity to own part of an enterprise. Often, successors are content only with receiving a “ransom”—payment of the actual value of the share. And it is not always expressed in the real value of the corresponding part of the business.

For the stated reason, if a businessman wants to transfer his business to a relative or other worthy person after death, he must begin to prepare the ground for this during his lifetime:

1. Present the candidacy to your partners.
2. Enlist the support of co-owners, obtain guarantees from them not to interfere with the entry of the selected person into the Society.
3. Make sure that the current version of the Charter does not contain restrictions or prohibitions on inheriting a share.

By following the indicated precautions, problems can be avoided.

However, it is better to start introducing “your” people into the Company while they are still alive and in full health. Give them a small share to start with (sell or donate).

Being a participant, even with a small percentage in the authorized capital, a person can already participate in the General Meeting, be aware of the Company’s affairs, and have access to its documentation.