Arranging insurance for your business can be time consuming and expensive, especially when dealing with multiple covers and providers. Our Corporate Solutions Team have the expertise to make this a smooth and easy process.
The level of insurance can be calculated under different bases, such as multiples of business profits or salaries of the key personnel, or even a proportion of the payroll cost, depending on the type and structure of the business.
This protection is designed to pay a pre-determined lump sum to the business on the death or critical illness of a key shareholder, both to help the remaining owners retain control of the business by providing capital to purchase the shares from the individual or their family and to ensure a fair price can be paid to those affected when it is most needed.
There are many questions that will need answering when deciding whether shareholder protection is a requirement for your business:
- Have you discussed the effect of the death of one of your fellow shareholders on the structure and ownership of the business?
- Do you have sufficient, readily-available assets to buy that person’s share of the business, or would their family like to remain involved?
- You may have a strong working relationship with your current colleagues, however, would you feel the same way working with their spouse, or their children?
- Would your family wish to remain involved in the business should anything happen to you, or would they prefer to sell the shares and release the capital?
- Would your family receive a realistic price from a third party if they were to sell them on, and is the marketability of the shares good in the instance of the business having lost a key decision maker?
- Do the company’s Articles of Association allow for a third party sale of shares, or are there specific restrictions on the transfer of shares which need to be considered?