If one of your shareholders should die or become critically ill, Shareholder Protection Insurance can help the remaining shareholders purchase their shares
Losing a shareholder in the event of death or critical illness could have a very significant effect on the ownership of your business. If you’d like to know more about Shareholder Protection Insurance, or would like to arrange a quote, contact us and we’ll be happy to help.
What is Shareholder Protection Insurance?
If one of your business’s shareholders should die or become critically ill, the business may not be able to continue as usual. Shareholder Protection Insurance pays a lump sum to enable them to purchase the shares, without needing to borrow or disrupt the cashflow of the business.
Why might you need Shareholder Protection Insurance?
The deceased shareholders shares would likely pass to their spouse or family as part of their estate. As one of the remaining shareholders you may then find yourself with a shareholder with no knowledge or interest in the business.
Worse still, they might not want the money tied up in the business and would prefer to sell – possibly to a competitor. Shareholder Protection gives the remaining shareholders a simple means of acquiring the shares. It also allows the deceased shareholder’s estate a way of releasing funds from the business in return for their shares. This is usually a better outcome for all parties than a protracted negotiation or the sale of the shares to another party.
What do you need to consider?
Before arranging Shareholder Protection Insurance, here are some of the things you should consider:
- The split of equity among the shareholders
- Existing shareholder agreements
- Assets available to shareholders to buy the shares if required
- The cashflow of the business
All of these factors will have a bearing on whether or not you need Shareholder Protection, and the level of cover required. One of our team of advisers will be happy to help you discuss the full implications for your business.
How can JM Glendinning help you with Shareholder Protection Insurance?
Our advisers have many years’ experience of dealing with Shareholder Protection Insurance. They can provide you with a quotation and help you arrange suitable cover for your business.