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Do you have a “Company Will”?

Facio ut Facias

I do, that you may do, is a well-known Latin civil law term which occurs when you agree with a person to do something for them if they will do something for you. There is no better explanation than this when it comes to Shareholder Protection, better known as the ‘company will’. This will all become clear later. So, what do we mean when we say, ‘the company will’?

Shares or equity in a business may be your most valuable assets. Your ‘company will’ has one primary function: to spell out the wishes of the business owners in the event of their death or critical illness. Although not straightforward, if the company will is aligned to its constitutional documents, it can mean the difference between fulfilling the true wishes of a shareholder and leaving a legacy for their loved ones, or leaving it to the law and putting their family’s financial future at risk.

Picture this:

Mrs Edwards and Mr McRae run a very successful online fashion retailer; they are both 50% shareholders in the business. Mrs Edwards has two children and is married to Mr Edwards who looks after the children on a full-time basis. Mr McRae has a wife of 20 years and is happily married.

Mrs Edwards recently lost her father to cancer; this has prompted her to think about her mortality – what if something happened to her?

Mrs Edwards’ thoughts:

  • What if she suffers a heart attack? Stroke? Or cancer like her dad? What happens to the business?
  • What if she needs her savings for something important to the family? How can she ensure there is capital for the business to keep it afloat?
  • What if she dies and Mr Edwards inherits her shares, becoming a co-shareholder with Mr McRae?  He already has enough on his plate, being a stay-at-home dad. The stress and strain of running a business may well cause issues. And how will Mr McRae feel about working with her husband?

If you were Mrs Edwards, would these be your thoughts?

Mr McRae may be capable of running the business as a majority shareholder, but how does he secure the company’s future and that of both families, if something happened to Mrs Edwards?

With all this in mind, Mrs Edwards decides it’s best to take out a Shareholder Protection plan for both herself and Mr McRae to secure the company’s future. Mr McRae agrees. They decide to draw up the “company will” and align it to the company’s constitutional documents.

It looks something

The problem: Mrs Edwards and Mr McRae want to purchase each other’s shares if one of them were to die or become critically ill.

The solution: life insurance, correctly implemented alongside the company’s constitutional documents, ensures the shares can be returned to the business. Why? They don’t have the cash to buy out the shares inherited by the surviving spouse, and the bank is unlikely to lend the funds in the event of death or critical illness.

The result: the shares remain in the company, dependents have financial security, and control of the business is retained.

The cost? According to many studies, the average age of a business owner in the UK is 40 years old. Let’s say Mrs Edwards and Mr McRae are both 40, non-smokers and require £750,000 of life cover, this could cost just over £60 per month for both of them.*

Is this resonating with you? What have you done to secure your company’s future?


There are range of things that need to be considered:

  1. Do you have Articles of Association? When was this last checked?
  2. Do you have a Shareholder Agreement? When was this last checked?
  3. Do you have a Partnership Agreement? When was this last checked?
  4. Do you have an Automatic Accrual arrangement? When was this last checked?

You can see a common theme here: have your company’s constitutional documents regularly checked by an expert, they will have a bearing on how you set up a life insurance arrangement (if at all).

Facio ut facias? If you’re a shareholder, do you agree with your co-shareholders to do something for them if they will do something for you? There is no better moral obligation to secure your business, if not for your fellow shareholders, than for your family. If there are two or more shareholders in your business and you’re a limited company, partnership or limited liability partnership, get in touch with us to see how we can help you to secure your company’s future and provide a “will” for the business.

*Quote generated 02/06/2021 on guaranteed premiums, purely illustrative and subject to change at any time.