Consequences of Lunacy of a partner in a private company
In a private limited company is set up by two persons. One person dies or becomes a lunatic, then what happens to the private limited company ? Does it become a One Person Company? If so, does the articles and memorandum of association need amendment ?
In order for a private limited company to function, there must be a minimum of 2 directors. In the event of death of one of the two directors of the company, the shares which were owned by the deceased director may be sold to a person who the Board of Directors wish to appoint as the new director. A Private Limited Company does not become a One Person Company on the death of one of the directors. However, a Private Limited Company may be converted to a One Person Company after passing a Special Resolution in the General Meeting in order to approve the conversion. Further, before passing such resolution, the company has to obtain a No Objection in writing, from existing members and creditors. It is important to note that No objection must be obtained from existing members and creditors before passing Special Resolution.
Why not create one now for free in under 10 minutes!