Shareholders protection insurance (also for partnerships) is designed to ensure that the aftermath of a shareholder’s or partner’s death is as smooth and stress free as possible, paying out a lump sum to the remaining shareholders/partners to be able to buy back the shares of the deceased.
The unexpected can happen and the impact on your business could be damaging and permanent. As well as ensuring the stability and longevity of the business these policies also offer the peace of mind that fellow stakeholders and family members will be looked after should the worst happen.
Shareholders protection insurance (also for partnerships) is designed to ensure that the aftermath of a shareholder’s or partner’s death is as smooth and stress free as possible, paying out a lump sum to the remaining shareholders/partners to be able to buy back the shares of the deceased.
The unexpected can happen and the impact on your business could be damaging and permanent. As well as ensuring the stability and longevity of the business these policies also offer the peace of mind that fellow stakeholders and family members will be looked after should the worst happen.
Like most financially responsible people you’ve probably written a personal will. No doubt you did this to make sure that your estate goes to your chosen beneficiaries in the event of your death.
But what about your business? What would happen if you, or one of your co-shareholders, died or had to retire through ill heath?
Have you established a process that will ensure that the business shares could be bought by the remaining shareholders for a fair price?
If a business loses a key shareholding director, it’s fair to assume that it’s unlikely to have adequate cash flow to be able to buy those shares. Borrowing funds from the bank is one solution, but that might not be straightforward or quick.
Being unable to buy these shares or having no agreement in place to manage this situation, could lead to expensive legal action, loss of control of the business and financial difficulties for the dependants.
Boardroom confusion can lead to conflict in decision making as the surviving owners and the deceased’s family may have very different ideas about the future of the business. Other potential problems include:
The cover we recommend depends on ther business set-up:
Each shareholder or partner takes out a plan on their own life which is written in trust for the other business owners. Each shareholder or partner signs a cross option agreement, giving the surviving business owners the option to buy the deceased owners shareholding and the estate option to sell them.
This process helps ensure business continuity (the business carries on trading with minimal disruption). The remaining partners use the money paid under the claim to buy the shares from, usually, the family of the deceased and the business continues.
A company share purchase is paid by the company and is usually free of Corporation Tax. Premiums will not be subject to Income Tax or National Insurance for shareholders.
The unexpected can happen and the impact on your business could be damaging and permanent.
As well as ensuring the stability and longevity of the business these policies also offer the peace of mind that fellow stakeholders and family members will be looked after should the worst happen.
Employees are a company’s greatest asset. They are your competitive advantage and without them your company could be at serious risk.