Who is the Legal Heir of a Company?

Legal heir meaning

A legal heir is someone who is legally eligible to inherit the properties and assets of another person after his/her death.

Under the laws of succession of the country, the legal heirs are also liable to the liabilities of the deceased to the extent of the assets inherited by them.

Legal heir certificate

In the absence of a Will of the deceased, the legal heirs have to apply for a certificate from the concerned government authority; this certificate is called "legal heir certificate".

The names, age, and other details of the eligible legal heirs are mentioned in such a certificate.

Legal heir of a company

The concept of legal heir does not apply to a company directly. It applies only to natural persons, whereas a company is an artificial person under the law.

But, one can ask as to what happens to the assets and liabilities of the company after it's closed down legally. That's a valid question.

The process of closure of a company goes through different phases. When it comes to sharing the money and assets after adjustment of liabilities, a liquidator is appointed to oversee the process. The payments are made to the parties systematically in a certain order.

At first, the secured creditors are paid their dues. Then secondary preferential creditors including employees are paid their dues including wages. The dues are calculated up to a certain period, not all.

Post all such payments, the financial creditors are paid their dues including secured and unsecured debts. If anything remains after that, the government and other statutory dues are paid off.

At the end, the remaining proceeds after adjustment of all other payments are paid to the equity shareholders of the company.

This order of payments differs from country to country. In accordance with their respective corporate and securities law, the assets of a company under liquidation are disposed of.

Hence, it can be informally assumed that all such eligible individuals and organizations, who are entitled to payments as mentioned above, become the legal heirs of a company.