What is shareholder protection insurance?
If a business owner dies with no share protection in place, their share in the business could be passed to family members who may choose to become involved in the ongoing running of the business – or even sell their shares to a competitor.
Shareholder protection insurance allows the remaining partners, shareholding directors or members to retain control of the business following the death of a business owner (or their diagnosis with a terminal or specified critical illness).
Legal agreements are prepared which stipulate how shares would be managed if a shareholder passes away. The policy, which is available either for fellow shareholders or the company as a whole, will pay a lump sum to the remaining business owners which can then be used to purchase the shares of the deceased holder.
Surviving family members will also receive financial compensation as the policies guarantee a fair buy-out price for them.
The benefits of shareholder protection insurance
- Peace of mind for all shareholders that fellow stakeholders and family members will be looked after properly should the worst happen.
- An important guarantee for surviving shareholders that they will not have to worry about finding the money to keep control of the business and can return to ‘business as usual’ as quickly as possible