Have you ever thought about who would be in charge or in a position of influence, if a key employee such as shareholder or business partner were to unexpectedly leave the business, in the event of death or long term illness? Without the right plans in place, your business could be exposed.
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Shared values, shared success – partnering with clients to mitigate riskThinking the Unthinkable
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Through our collective experience, we’ve observed many of the best and worst practices in the insurance advisory market. We’re here to challenge the status quo and aim to establish a new level of service. We’re combining the best traditions of technical advice and client centricity, with modern thinking and smart use of systems and technology to enhance the client experience and create a dynamic workplace for our team.
Challenges in your industry
If a shareholder or partner dies without leaving instructions regarding their shares, family members are generally next in line to obtain the assets. This can be problematic for a number of reasons. The family/beneficiaries may decide to take over the duties and responsibilities of their deceased relative.
How we support
Like key person cover, a shareholder protection policy can be tailored to the individual and the business. It can be adjusted to include death, or both death and critical illness, such as cancer or a heart attack.
Your business performs
Shareholder protection provides a lump sum on the death or serious illness of the shareholder / partner, which enables the remaining parties to buy back the shares, from the deceased’s beneficiaries. In this way, the beneficiaries receive the full value of the shares in cash and you maintain the control and equilibrium of your business.
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What is shareholder protection?
Shareholder protection insurance provides the funds for the remaining shareholders to buy back shares from the individual or beneficiaries, and retain control of the company if a shareholder or partner were to die or be diagnosed with a serious illness.
When companies are formed, the founding shareholders or partners create a vision for the direction the business will take. The sudden loss of a major shareholder or partner can cause unexpected disruption. Without the capital to buy back the shares, you could find yourself working with whoever inherits them, which could mean someone with a very different vision becoming involved in the business. Without shareholder protection, an organisation’s surviving controlling members may not be able to maintain the direction or future of the business.
Why is shareholder protection insurance important?
Families/beneficiaries may decide to take over the duties and responsibilities of their deceased relative. If this were to occur, it is possible that an organisation would suddenly have to deal with an inexperienced or disinterested person performing a key role.
If the family/beneficiaries decide to sell the shares to a third party, it could result in the remaining shareholders or partners losing control of the organisation as a whole.
In the event of shareholder cover funds being paid out to a policyholder, the family of the deceased or ill party will also receive compensation. This amount, as well as other details, should be agreed upon at the time that a policy is finalised.
The benefits of shareholder protection?
There are many benefits of shareholder protection. When businesses are formed, the founding shareholders create a vision of the direction the business will take. The sudden loss of a major shareholder can cause disruption. Without the capital to buy the shares back, you could find yourself working with whoever inherits them, which could mean someone with a very different vision calling the shots.
Safeguarding the shareholders’ interest in the business and providing peace of mind for shareholders and their families creates ongoing business continuity and stability for your employees.
Obtaining the right advice is important – you should be working with specialists who have experience dealing with these very sensitive issues.
Choosing the right shareholder protection policy
Ensuring the business remains in the right hands at the right time is incredibly important if something unexpected were to happen by providing the necessary means to retain control of the business.
Our team will work with you to develop and implement appropriate solutions to provide the stability you need to keep your business running smoothly, keeping you, your people and your livelihood protected.
Meet the shareholder protection team
James Porter
Managing Partner - Wellbeing Health & Protection
