Successful businesses will often have shareholders who may or may not be actively involved within the day to day running of the company. But if someone is investing money within the company or buying shares they will often want to know that the investment is safe. Having shareholder protection insurance with a shareholder agreement is the best way of doing this.
Examples of shareholder protection and why you may need it
For example two people in a company will often own 50/50 split. If one of the people die the other is now left with the running of the company. Key man insurance will help inject money to help the day to day running and of course this is very important. But you now may be left with someone else owning 50% of your company. That person could of course be the wife or husband of the deceased. They may of course want to sell their half of the company. What if they sell out to someone you do not get on with. This can have massive complications to your business.
A shareholder protection policy will allow each shareholder to receive a lump sum of money if another shareholder dies. This money can then be used to buy they shares from the new owner. The wife or husband is financially rewarded for the shares and the remaining partner is now a 100% shareholder. Along with the insurance there are shareholder agreements such as a cross option agreement or a double option agreement. Partnership agreements can be slightly different.
For more information on how these are set up and for any quotes please fill in the form and someone will be in touch soon.