Article 17(2): The Rule That Restarts a Dead Company

If the sole director of a company dies and no one else is a director, the company cannot lawfully act until someone is appointed to replace them. For most companies formed since October 2009 the way out is article 17(2) of the model articles, which lets the dead person's personal representatives appoint a new director by a simple notice in writing. It exists for exactly this situation: a sole director who was also the sole shareholder has died, and without this rule the company would be locked solid.

The lock is real and it is immediate. A directorship ends automatically at death, so on the day it happens the company has no one who can sign a cheque, run payroll, pay a supplier, renew insurance or file anything. Ordinarily a shareholder would simply vote in a new director, but the shares now sit in the estate of the person who died and cannot be voted until they are transmitted to someone. No director, and no one able to appoint one: that is the deadlock article 17(2) was written to break.

This page quotes the provision in full, walks through the written notice a personal representative actually serves, and answers the question that decides how fast any of it can happen — who is allowed to sign the notice before probate is granted. It also says plainly when the rescue does not exist at all, because a company with older or bespoke articles may not have it.

Why a sole director's death freezes the company

A limited company is a separate legal person, so it does not die when its owner does. What dies is the company's ability to act, and understanding why makes the rest of this make sense.

Two separate roles usually sit in one person in a small company: they are a director, who runs it, and a shareholder, who owns it. Death does different things to each. The directorship ends at the moment of death — a dead person cannot hold office, and there is nothing to resign. The shareholding does not end; it becomes an asset of the estate, held by the personal representatives until it is passed on. But holding shares in an estate is not the same as being able to vote them, and until the register is updated the company has no member who can pass a resolution.

So the two normal routes to appointing a director both close at once. The board cannot do it, because there is no board. The shareholders cannot do it, because the only shareholder has died and no one has yet stepped into their place on the register. Everything the company needs a human to do — approve a payment, sign a contract, respond to the bank — has no one able to do it. This is the specific trap of the one-person company: where a company has two directors and one of them dies the survivor keeps it moving, but a sole director leaves no one behind who is able to act.

What article 17(2) actually says

The model articles are the default constitution supplied by the Companies (Model Articles) Regulations 2008. Article 17 deals with methods of appointing directors, and paragraph (2) is the one that matters here. It reads:

In any case where, as a result of death, the company has no shareholders and no directors, the personal representatives of the last shareholder to have died have the right, by notice in writing, to appoint a person to be a director.

The next paragraph closes an obvious gap — what if two shareholders die and no one knows who died first. Paragraph (3) provides:

For the purposes of paragraph (2), where 2 or more shareholders die in circumstances rendering it uncertain who was the last to die, a younger shareholder is deemed to have survived an older shareholder.

Read those two together and the mechanism is complete. The people the law hands the key to are the personal representatives of the last shareholder to die. They do not have to be a director, a shareholder or an employee. Their right comes purely from being the ones responsible for administering the estate that now owns the company.

Source: The Companies (Model Articles) Regulations 2008 (SI 2008/3229), Schedule 1, article 17, published on legislation.gov.uk under the Open Government Licence v3.0.

The written notice the personal representatives serve

The mechanism is deliberately light. The article calls for a "notice in writing", and that is genuinely what it is — not a court order, not a form bought from anyone, not a meeting. In practice the personal representatives sign a short document that identifies the company, records that it has no shareholders and no directors as a result of the death, states that they are the personal representatives of the last shareholder, and appoints a named person to be a director with effect from a stated date.

Small things make it work smoothly. The person being appointed has to be willing to act and legally permitted to be a director — over sixteen and not disqualified. There is nothing to stop the personal representatives appointing themselves, and often that is the sensible choice, because it puts control in the hands of the people already dealing with the estate. Once the appointment takes effect, that new director can call a general meeting, deal with the transmission of the shares, and put the company back on its feet.

One honest caution belongs here. Appointing a director restarts the company; it does not resolve who ends up owning it. The shares still have to pass to whoever inherits them, and if there is a dispute about that — or about who the personal representatives even are — the appointment can be contested. Where the shares end up with people who have no wish to run the business, the same difficult questions arise as when families are buying out a dead shareholder with no cash to do it.

Can the notice be signed before probate is granted?

This is the question that decides speed, and the answer turns on a distinction most people have never had to think about: the difference between an executor and an administrator.

Where there is a valid will naming executors, the executors' authority runs from the moment of death. The grant of probate confirms that authority; it does not create it. In principle, then, an executor can serve an article 17(2) notice straight away, because they are already the personal representative the article refers to.

Where there is no will, or the will names no one able to act, the estate is dealt with by an administrator under the intestacy rules — and an administrator has no authority at all until the court issues letters of administration. There is nothing to sign a notice with until that grant arrives, which can take months. If this is your situation, the wider problem of authority under intestacy is set out in our guide to what happens when a business owner dies without a will and no one knows who is in charge.

Even for executors, though, there is a gap between having the right and being able to use it. The notice may be valid on the day it is signed, but everyone downstream — the bank, a customer, Companies House if it queries the filing — will want proof that the person signing is entitled to act, and the document that proves it is the grant. So while an executor may not strictly need probate to make the appointment, they will usually need it before anyone treats the appointment as real. In practice the appointment and the grant tend to move together, which is why families are told to apply for probate early.

When the model-articles rescue does not exist

Everything above assumes the company adopted the model articles. Not every company did, and this is the point at which a comforting article on the internet can do real harm.

The model articles came in for companies incorporated from 1 October 2009. Companies formed before that date very often adopted the previous default, known as Table A, which contains no equivalent to article 17(2). Older companies frequently ran on it for years and never updated. On top of that, plenty of companies — old and new — have bespoke articles drafted by a solicitor, and those vary enormously. Some improve on article 17(2); some remove it; some are silent.

So the first thing to do, before serving any notice, is to read the articles actually filed for the company. They are on the public register at Companies House and are free to view. If the model articles apply, article 17(2) is available. If the company runs on Table A or on bespoke articles with no equivalent clause, the personal representatives cannot simply appoint a director, and the route becomes an application to the court to sort out the register and get someone in place — slower, and a job for a solicitor. Checking the articles first is what decides which of those two worlds you are in, and it costs nothing.

Once a director is appointed: the bank, the register and the shares

Getting a director in place is the unlock, not the finish. A few things follow quickly.

The company must notify Companies House of the change. The death of the previous director has to be recorded as a termination, and the new appointment filed — the Companies Act requires the register to be kept current, and notification of these changes is due within 14 days. Keeping the public record straight matters because banks, suppliers and lenders check it before they will deal with the company again.

The bank is usually the next hurdle, and often the hardest. A bank will typically freeze or restrict the company account when it learns a sole signatory has died, and it will want to see the grant and evidence of the new director's appointment before it releases anything. This is exactly the period where a business with no accessible cash starts to struggle to pay wages and suppliers, and it is one reason lenders sometimes insist on protection in advance — the situation described in our page on why a bank wants key person cover before it lends.

Then there are the shares themselves, which still have to be transmitted from the estate to whoever inherits them under the will or the intestacy rules, subject to anything the articles say about transfers on death. That is a separate process from the appointment, and it can throw up its own problems if the business is valuable but the estate has little cash — the liquidity squeeze we cover in how families end up selling the firm to pay the tax.

Closing the gap before it happens

Article 17(2) is a fire escape. It is genuinely useful, but by the time you are reading it in earnest, the fire has already started: the account may be frozen, staff may be unpaid, and the family is learning company law in the worst week of their lives. Everything is recoverable, but it is slow, and slowness costs money and jobs.

The point worth taking from this while there is still time to act on it is that a sole-director, sole-shareholder company has a single point of failure, and it is a person. Two things reduce the damage if that person dies. The first is preparation on paper: making sure the model articles apply or that bespoke articles contain a workable clause, keeping a will current, and telling the family where the documents are. The gentler version of that conversation is a look at whether a limited company can even pay a director's funeral, which surprises a lot of owners.

The second is cash. A life policy arranged for the purpose puts money in the family's hands quickly, outside the frozen company account, so wages and suppliers can be met while the appointment and the grant catch up. It does not replace the legal steps, but it buys the time they take. If there is no such cover on the person the whole company depends on, you can compare life insurance quotes and have an FCA-authorised broker size it against what the business would actually need to survive the gap. For the wider picture of what dies with an owner and what survives them, our guide to what happens to a business when the owner dies pulls the threads together.

Scotland and Northern Ireland

Company law is the same across the United Kingdom. A company registered in Scotland or Northern Ireland is governed by the Companies Act 2006 and can adopt the same model articles, so article 17(2) works in exactly the same way wherever the company sits. The deadlock, and the fix for it, do not change at the border.

What differs is the document the personal representatives use to prove they are entitled to act. In England and Wales that is a grant of probate or letters of administration. In Scotland the equivalent is confirmation, issued by the sheriff court, and the personal representatives are the executors named in the will or appointed by the court. In Northern Ireland a grant is obtained from the Probate Office of the High Court. The right under article 17(2) is identical; the proof each family carries to the bank and to Companies House is the one issued where the deceased lived.

Frequently asked questions

What does article 17(2) of the model articles say?

It provides that where a company has no shareholders and no directors because the last shareholder, who was also a director, has died, that person's personal representatives have the right, by notice in writing, to appoint someone as a director of the company. A companion paragraph deals with the rare case of two shareholders dying together, treating the younger as having survived the older. The wording is set out in full above, taken from the Companies (Model Articles) Regulations 2008.

Do we need probate before appointing a director?

The personal representatives have to be able to show they are entitled to act, which in practice usually means producing the grant. An executor's authority technically runs from death, so some registrars will accept the will and death certificate for the appointment itself, but expect to be asked for the grant before the bank or anyone else moves. An administrator under an intestacy has no authority at all until letters of administration are issued, so in that case the appointment genuinely has to wait.

What if the company has different articles?

Then the rescue may not exist. Companies incorporated before October 2009 often adopted the old Table A, which has no equivalent provision, and bespoke articles vary widely — some replicate article 17(2), some remove it, some are silent. Check the articles filed at Companies House first, because the answer decides whether a straightforward written notice will do or whether a court application is needed to get a director in place.