Business Succession Planning for South African Owners

Shares registered in the deceased's own name generally become estate assets for administration by the executor. The executor must still work within the Companies Act, the company's MOI, any valid shareholder agreement and the securities register. A will instruction does not make an immediate private transfer at death.

Check whether the interest is actually owned by the individual, a trust, another company or a nominee arrangement. Also separate ordinary or preference shares, a close-corporation member's interest, partnership rights and a shareholder loan account. They are not interchangeable.

The company's securities register and current CIPC beneficial-ownership filings should match the real structure. CIPC currently requires annual returns, beneficial-ownership declarations and the applicable securities, members or beneficial-interest register within 30 business days after the incorporation anniversary.

A buy-and-sell agreement can create a binding route for the deceased owner's interest to be sold to surviving owners or another purchaser. It should say whether death triggers a compulsory or optional sale, who buys, what is sold, how notices work and when ownership, risk and voting rights change.

It also needs a workable price mechanism, payment terms, security for deferred payment, treatment of loan accounts, policy proceeds, breach, incapacity and tax. A short clause saying the survivors have a first option may leave the estate with uncertainty when cash is most urgent.

The agreement, policy ownership and premium history must be reviewed together if the parties expect an estate-duty exclusion for life-policy proceeds. SARS's buy-and-sell guide shows that the statutory requirements are fact-specific, and trust-held shares can add complexity. No exclusion should be promised in advance.

Open the complete buy-and-sell agreement on death guide for the clause, valuation, funding, shortfall and implementation checklist.

Section 9HA of the Income Tax Act generally treats a deceased person as disposing of assets at market value at death, subject to statutory exceptions such as qualifying spouse treatment. A later estate sale or distribution has its own tax basis and timing.

Current estate duty applies after allowable deductions and the R3.5 million section 4A abatement at 20% on the first R30 million of dutiable amount and 25% above that. Life-policy proceeds can be deemed property even when paid outside the estate, unless a specific exclusion or deduction applies.

For the 2026/27 year, SARS records a maximum effective CGT rate of 18% for individuals and special trusts, 21.6% for companies and 36% for other trusts, plus a R440,000 annual exclusion in the year of death. The small-business asset relief has detailed conditions, a R15 million market-value ceiling and a R2.7 million lifetime limit. Do not assume the owner, shares or transaction qualifies.

Model tax with a registered tax practitioner using the ownership history, base cost, valuations, marital position, policy structure, loan accounts and intended transaction. The cheapest-looking structure before tax may not be the best outcome after tax and liquidity.