Shareholder Protection

Shareholder protection aims to mitigate the impact of the possible loss of control of the business after the death or serious illness of a partner or shareholder, whilst also ensuring that the beneficiaries of the estate of the deceased are financially compensated.

Should a major shareholder die or become critically ill, unless you have something in place, the shares will pass automatically to the shareholder’s family who can then sell them or become involved in the business itself. In the case of a partnership, the partnership could be dissolved.

Share purchase protection ensures that the business has the funds to buy back the shareholding from co-owners or partners. Then, in the worst case scenario, a lump sum would be paid out to the remaining partners to enable them to buy that person’s shares, whilst ensuring that the family receive financial compensation.

This normally requires the use of multiple policies and suitable trusts, following an examination of the company’s articles of association or partnership agreement. It is a complex area so talk to Kellands Bristol for professional financial advice.

We can help you ensure that the right options for your business succession planning are taken.