Shareholder Protection
Shareholder protection arrangements are a combination of a legal agreement and a life policy. The purpose is to have a legally enforceable contract in place requiring surviving shareholder to 'offer to buy' and the legal representatives of the deceased director, to 'offer to sell' shares. The life policy provides the funds to the surviving directors to finance the purchase of the shares.
The agreement can be arranged to take into account a shareholder suffering a critical illness.
Consider what would happen to if a shareholder dies. Usually their their interest will pass to their heirs.
- Do they have the necessary skills or interest in the business?
- Will they be entitled to dividends?
- Could they interfere in the running or success of the business?
For Further Advice
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