Can a child take over a business simply because shares are left to them in a will?

A business owner’s will can express an intention to leave company shares to a child, but it does not automatically settle who will run the business, exercise voting rights or control company seals and bank accounts.

Clarify share ownership and family property first

Check the actual shareholding and whether it involves marital property, nominee arrangements, a pledge of equity or unpaid capital contributions. Testamentary planning should be based on an understanding of the property available for disposition and related obligations.

Shareholder status and the articles of association

For a limited liability company, Article 90 of the PRC Company Law provides that a lawful heir of a deceased natural-person shareholder may inherit shareholder status unless the company’s articles of association provide otherwise. The articles and their application should be reviewed alongside the will. The rules for a company limited by shares require separate consideration.

Being a shareholder is not the same as managing the business

Becoming a shareholder does not automatically make a person the company’s legal representative, director or manager. The handover should also address voting rights, governance, licences and certificates, company seals, bank accounts and business authorisations, in light of the articles and applicable procedures.

What documents should be prepared?

Start by reviewing the articles, shareholder register or evidence of shareholding, capital-contribution records and existing management authorisations. Plan alongside the will, evidence of family relationships and other required documents. Where there are multiple heirs, consider how rights will be exercised and how they will communicate.

The appropriate arrangements depend on the company type, the property involved and the relevant legal procedures.

Sources

PRC Company Law (Chinese) · Original Xiaohongshu post (Chinese)

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