Shareholder Protection
Shareholder and Partnership Protection helps you retain control of your business following the death or incapacitation of a shareholder or partner.
Following the loss of a shareholder or partner, Shareholder Protection insurance provides you capital to buy back shares from the deceased’s beneficiary. You retain control of your business and the deceased’s spouse is provided for financially.
No Obligation Consultation
Does my business need Shareholder or Partnership Protection Cover?
Following the death or incapacitation of a shareholder or partner, the deceased’s shares typically pass to a benefactor, usually a spouse, as decreed in a Will.
If management is weakened following the loss of a shareholder or partner, decision making may become ineffectual, resulting in business stagnation, or worse collapse.
Without the correct governance documentation, remaining shareholders may be powerless to prevent the benefactor from selling the shares to an unwanted outside investor.
Assuming the benefactor agrees to sell the shares to the remaining shareholders, a “fair” valuation for the stock is required before the purchase. Reaching a “fair” valuation can be fraught, especially if a spouse is grieving. Thereafter, capital is required to purchase stock from the benefactor.
Following a successful claim, Shareholder and or Partnership Cover provides you capital to buy-back stock and retain control of your company.
No Obligation ConsultationBenefit of a Shareholder and Partner Protection Policy
The cost of purchasing shares reflects your business valuation and number of shares.
Without liquidity to buy-back shares, remaining shareholders may require external finance to purchase the stock.
An external investor could provide capital to purchase the shares, but this dilutes existing shareholders, weakening their control over the business.
Commercial loans offer liquidity, but debt financing incurs prohibitive interest rates.
Shareholder Protection typicall provides a tax-free cash lump sum following a successful claim which can be used to purchase shares.
You retain control of your company in a cost-effective manner.
Do I need Shareholder or Partnership Protection Insurance?
Shareholder Protection is recommended for limited companies as cover is arranged for individual shareholders’ lives.
Partnership Protection is recommended for Limited Liability Partnerships as cover is arranged for the business partners.
No Obligation Consultation
Cross-Option Agreement
Shareholder protection is arranged in conjunction with a Cross-Option agreement.
Cross-Option agreements provide shareholders a legal “right to buy” shares from the deceased’s benefactor helping them retain control of their company.
Cross-Option Agreements confirm the methodology to value shares. This avoids uncomfortable negotiations with a spouse vis-à-vis a “fair value” for shares during a time of heightened emotions, i.e. following the death of a shareholder/spouse.
Contact us today for more information or to apply for our shareholder protection policies and help protect your business’s future.
No Obligation Consultation
Have You Considered Adding Critical Illness?
If you or a partner, shareholder or Key Person suffered a heart attack, stroke or cancer and survived, but required an extended period of sick leave, they and your business could benefit from Critical Illness.
Following diagnosis and successful claim, Critical Illness cover would pay a cash lump sum to the policy holder helping alleviate any undue financial pressure.
Your No Obligation Consultation
Should you wish to learn how Key Man / Key Person Insurance can benefit your company, please:
- Complete the short form below
- Email us at protect@fatgreen.co.uk
- Call on 0333 050 0088
We look forward to hearing from you.
No Obligation Consultation
