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Relax, our advice is free
If you share ownership of a business with other directors or shareholders, you need to ask yourself one question: if one of them died or became critically ill tomorrow, what would happen to their shares?
Without protection in place, those shares pass to their estate most likely a spouse, family member, or even their solicitor. That person may have no interest in running the business. They may want to sell. They could even sell to a competitor.
You'd have no say in it. And no funds to buy the shares back.
Shareholder Protection Insurance solves this problem. It provides the remaining shareholders with a lump sum payout enough to buy out the affected shareholder's stake at a pre-agreed value keeping ownership exactly where it belongs.
We work with company directors and business owners to arrange Shareholder Protection that fits your specific structure whether you have two shareholders or several.
We can help you:
• Establish the right level of cover based on the current value of each shareholding
• Recommend the most appropriate policy structure for your circumstances — whether that's an own-life policy written in trust, a life-of-another arrangement, or a company-owned policy
• Ensure the policy works alongside a correctly drafted cross-option agreement
• Search the market for competitive quotes and handle the paperwork from start to finish
We'll make sure you understand exactly what would happen if a claim were made, and that the cover keeps pace with the value of your business over time.
Any business with more than one shareholder should consider it. It is particularly important in small and medium-sized companies where the unexpected loss of a shareholder could cause significant financial disruption or lead to outside parties gaining a stake in the business.
A cross-option agreement — sometimes called a double-option agreement — is a legal document that sits alongside the insurance policy. It gives the surviving shareholders the option to buy the shares, and the deceased’s estate the option to sell, within a set timeframe. Without it, the arrangement may not work as intended from a tax perspective. We can point you in the right direction on this.
Cover should reflect the current market value of each shareholder’s stake in the business.
No. Key Person Insurance protects the business from the financial impact of losing a critical individual. Shareholder Protection is specifically about ownership ensuring the remaining shareholders can retain control of the business. Both can be important parts of a wider business protection strategy, and we’re happy to advise on both.
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