Shareholder Protection Insurance

If one of your partners, or a shareholding director, dies what effect would it have on your business?

Consider losing:

your majority shareholding Director. They have important voting rights that directly affect the running of the company. If a majority shareholder dies these rights normally pass to the deceased's dependants.
your business partner. In the same way as a majority shareholding Director, the death of a partner usually results in their share of the business being passed to their dependents.

This could affect your company in two ways:

The dependants now have a say in the running of the company due to their shareholding. They probably won't have the necessary experience and - will they share the same objectives that the surviving shareholders have for the business?
They might decide to sell the shares. Unless the other shareholders have sufficient funds to buy them, they may have no option than to sell them to a third party, perhaps hostile or even a direct competitor.

Depending on the terms of the partnership or shareholding the dependents may gain control of the company.

The simple solution to these scenarios is partnership/shareholder protection insurance.

This is a legal agreement between all of the partners and shareholders who agree to sell their part in the event of their premature death. The shareholder protection insurance policy contracts to provide money for the surviving shareholders to purchase the deceased shareholders equity. This insurance policy ensures the long term security of your business.

Talk to us about how we can protect your business with shareholder protection insurance and make sure your business future is healthy. Or ask us about any of our other insurance services.

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