If you happen to be in business with one or more other shareholders, no matter how “small” you
believe the business is, be sure to get your lawyers / legal advisors to put in place a proper and sound
shareholders agreement containing a clause on what exactly must happens in the event of death of
one of the shareholders.
In our over 15 years’ experience in corporate commercial law advisory, we have seen many a once
prominent business, crumble within years, if not months, of the death of one of the shareholders,
courtesy of a surviving spouse who simply never shared in their late spouse’s joint vision and purpose
for the business as did the remaining shareholders(s).
This becomes worse in instances where the deceased shareholder was a majority / controlling
shareholder.
The clause that we recommend here, may take any form or shape, depending on the nature of the
business and what the shareholders in fact desire, but for the most part, a “Right of first refusal”
clause is ideal.
This is the clause stating essentially that, in the event of death of a shareholder, his/her shares in the
business will be independently evaluated and offered for sale, first to the remaining shareholders and
only in the event of the remaining shareholders being unwilling or unable to purchase same, will they
devolve to the deceased shareholder’s estate for distribution in terms of the provision of a will or the
rules of intestate succession.
Your lawyers / legal advisers will of course customize this clause to suit the unique nature and
circumstances of your business.
If this is an area you had not previously thought about as shareholders in a business, perhaps it is
about time you did.

Morolong Inc.
Corporate Commercial Law Advisory
Email: info@morolong.com