Shareholder Protection
Ensure surviving shareholders can buy back shares if a co-owner dies or suffers a critical illness.
FCA Regulated
Extensive Lender Panel
Based in Uxbridge
UK Wide Coverage
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Shareholder protection insurance works alongside a shareholder agreement (or cross-option agreement) to fund the purchase of shares if a shareholder dies or is diagnosed with a critical illness. Without it, shares could pass to a deceased shareholder's family, who may have no interest in running the business.
How Shareholder Protection Works
- Each shareholder takes out a life and/or critical illness policy on the others
- A cross-option agreement is put in place alongside the insurance
- If a shareholder dies or becomes critically ill, the policy pays out
- The surviving shareholders use the payout to buy the deceased's shares
- The deceased's family receives fair value for the shares
Why It's Essential
- Prevents shares passing to family members who may not want to be involved
- Protects surviving shareholders from unwanted new partners
- Ensures the deceased's family receives fair financial value
- Maintains business stability and continuity
Frequently Asked Questions
Do I need a shareholder agreement as well as insurance?
Yes. The insurance provides the money, but a cross-option agreement (drafted by a solicitor) creates the legal framework for the share purchase. Both are essential for the arrangement to work properly.
How are the shares valued?
The cross-option agreement will specify how shares are valued, typically by an independent accountant at the time of the claim. The insurance sum assured should be based on a realistic current valuation, reviewed periodically.
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Speak with one of our expert advisers today, initial consultation at our expense, and without obligation.