FILTERS:

Sole interest

12 March 2009

A question which examiners and practitioners may be confronted with is whether the executor in the estate of a sole member of a Close Corporation has the capacity to dispose of the immovable property belonging to such Close Corporation.

From the outset it must be made clear that the executor is not deemed to be "owner" of property belonging to a Close Corporation, as provided for in section 102 of the Deeds Registries Act 47 of 1937. The executor can thus not in terms of section 20 of the Deeds Registries Act transfer the immovable property.

To determine how the executor must deal with such immovable property one has to consult the Close Corporation Act, 1984 which clearly provides in section 35 as follows:

"35. Disposal of interest of deceased member. - Subject to any other arrangement in an association agreement, an executor of the estate of a member of a corporation who is deceased shall, in the performance of his duties-

(a) cause the deceased member's interest in the corporation to be transferred to a person who qualifies for membership of a corporation in terms of section 29 and is entitled thereto as legatee or heir or under a redistribution agreement, if the remaining member or members of the corporation (if any) consent to the transfer of the member's interest to such person; or
(b) if any consent referred to in paragraph (a) is not given within 28 days after it s requested by the executor, sell the deceased member's interest

to the corporation, if there is any other member or members than the deceased member:
to any other remaining member or members of the corporation in proportion to the interests of those members in the corporation or as they may otherwise agree upon; or

to any other person who qualifies for membership of a corporation in terms of section 29, in which case the provisions of sub-section (2) of section 34 shall mutatis mutandis apply in respect of any such sale."

From the above quoted section it is thus clear that the executor only has the power to dispose of the members' interest in the Close Corporation and not the immovable property as such.

Republished with permission from SA Deeds Journal



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