Legal Question in Business Law in California

Although you don't say so, I assume each of the directors also owned, or was entitled to own, 1/3 of the corporation's stock. Let's call the owners X, Y and Z.

If that was the case, when X dies, his stock passes to his heirs. Just because he was unmarried doesn't mean he had no heirs. Even if he had no will, or no trust, or no children, or no executor, he probably still has heirs. So, one or more persons probably now own X's 1/3 interest. This is a significant reality that will affect what Y and Z may do. An effort must be made to determine who is or are the new owner(s).

Next, a corporation is supposed to have an annual shareholders' meeting for the election of directors. The bylaws usually specify the time of year for the annual meeting, and Spring is a fairly common time. The bylaws may also address what happens when there is a vacancy on the board of directors between annual meetings.

Since a corporation with three or more shareholders is required by law to have at least three directors, the corporation should take steps to fill the board vacancy. Probably the right was to do this is by having a regular or special meeting of the shareholders, following proper notice thereof, including notice to X's heirs.

Once the corporation knows who all of its shareholders are, and its board consists of three (or more) duly-elected directors, it can proceed with winding up.

Y and Z cannot lawfully take corporate property to the exclusion or detriment of X's heirs, and Y and Z should fill the board vacancy before attempting to wind up and dissolve the corporation.

If there is any doubt about how to locate the heirs, carry out noticing and holding a shareholder meeting, electing a director (or new slate of directors), winding up the affairs of a corporation and dissolving it, etc., Y and Z (or, the corporation) should retain legal counsel.