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- Shares may go to the deceased’s family, who may have little interest in the business and would prefer a cash sum
- The other shareholders may want to retain control by buying lost shares – but may not have the resources to do so
- The shares may be taken over by someone who does not share the company’s objectives – and may even be a competitor
The correct Insurance Policy allows for sufﬁcient funds to be available in the event of the death or speciﬁed critical illness of a shareholder. This ensures that the company can continue to operate unhindered while the outgoing shareholder or their family receive fair compensation.
It provides documentation to enable the surviving shareholders to receive the funds free of tax under current legislation, tax year 2017/2018.
Benefits for shareholders
In the event of a shareholder’s death or speciﬁed critical illness, one of the most important things to your business is to ensure continuity. Shareholder Protection sets out the procedures and policies to help ensure that you retain control, and have the necessary funds to do so:
- Arrange for the most appropriate transfer of shares to surviving shareholders, or the company, at a fair commercial price
- Set up insurance policies to provide the funds to purchase the shares
- Avoid having to draw on funds set aside for other purposes
- Prevent the sale of shares to hostile parties, or competitors
- Documentation to enable all transactions to be made tax-efﬁciently
- Help maintain business stability and continuity
- Help retain conﬁdence of employees and customers
This article (Shareholder Protection) is intended to provide a general appreciation of the topic and it is not advice. For more information please contact Moscrops Financial Planning on 0161 761 2534 or email firstname.lastname@example.org and we will be happy to assist you.
Article expiry: 05 Apr 2018
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