Shareholder Protection Insurance

Have you considered what would happen if your business partner died or became seriously ill?

Shareholder and Partnership Protection allows for sufficient funds to be available in the event of the death or serious illness of a shareholder. This ensures the company can continue to operate unhindered while the ongoing shareholder or their family receive fair compensation. This also provides documentation to enable the surviving shareholders to receive the funds free of tax. 

Not having Shareholder Protection can be devastating for the business structure if such an occurrence should ever happen. If a co-owner or shareholder were to die, the shares could go into the deceased estate and commonly be inherited by the spouse or partner.

To ensure control of the business is retained, the remaining owners need to have the ability to purchase the business share from the retiring owner or deceased owner's estate.

It is also important to ensure that the sale of the business share fairly represents its value at the time of death or retirement through ill health.

Partnership and shareholder protection provide both the funds and the framework to ensure that these objectives are achieved.

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The market will be searched extensively to ensure the best arrangement is sourced for your company needs. Our partnering shareholder protection firm are a team of specialist consultants authorised by the FCA, to provide regulated advice and will present you with the best options for your company, considering your circumstances.

Leading in Shareholder Protection

  • Trusted and regulated impartial advice
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Shareholder protection, protects shareholders against the impact a death or illness of a shareholder may have on the financial stability of a business.

In most cases shareholders leave their estate including their shares to their beneficiaries upon death and sometimes critical illness. Consequently the business now has a new shareholder with possibly no experience and little knowledge of the business. 

It is quite likely the new shareholder will take a wage or even a percentage of the profits when contributing very little to the business themselves. Potentially the inherited shares could be sold onto a third party, even a competitor. Any of these scenarios caused by the replacement of a crucial team member through inheritance could be detrimental to the future success of the business. 

Generally companies adopt a clause in their deeds or Articles of Association so that should a shareholder die the remaining shareholders can reserve the right to buy the shares, usually at a pre-determined price. 

For businesses that are prepared for this situation shareholder protection can ensure that remaining shareholders are financially able to deal with the situation that has arisen. The sum of protection can be determined by the amount perceived necessary to buy out the deceased or critically ill shareholder’s share of the business.

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