Shareholder protection is a cover that ensures that a business has the funds to ‘buy back’ shares from the deceased directors estate. It ensures that the deceased or critically ill shareholder’s family receives funds and that the business.
Shareholder Protection is for a limited company with multiple shareholders and is designed to protect shareholders interests and their families in the event of the death or critical illness of a fellow shareholder. These policies are often taken out in conjunction with a cross option agreement, which facilitates the passing of shares from a deceased shareholder’s estate to the business, once the option is exercised. The insurance is used to pay for the shares.
How does it work?
It works by insuring the life of each shareholder through the business, i.e. the business pays the premiums, so on-death, the business receives the cash payout and the deceased’s family receives the shares.
The business or the family then exercises the option to buy or sell the shares, which is then binding on the other party.
The family receives the funds and the business retains the shares for redistribution to the existing shareholders.
Do I need this type of cover?
If you are a shareholder in a successful firm, irrespective of whether you have a controlling share of the business, where, your shares are have material £value, then you should consider taking out a suitable shareholder protection policy.
Want further information?
Perhaps the most important advice I give to my clients is to plan carefully and do not leave things to chance. My job is to help you grow and protect your assets by providing the knowhow you need to make informed decisions about your future. My job is to help you grow and protect your assets by providing the knowhow you need to make informed decisions about your future. I then help you implement the strategy into a reality. I will work with you over the long term, helping you to build, brick by brick, a successful and robust financial situation.
Get in touch to discuss your Shareholder Protection requirements.