Shareholder Protection Insurance
Shareholder protection insurance safeguards your business by providing a lump sum to the remaining shareholders so that they can buy the shares of the ill or deceased shareholder and whilst their estate received a lump sum. This means that there is a reduced risk of legal action with the family and the remaining shareholders don’t have to take on any debt to buy the shares. Think about it, if your business partner died and you couldn’t afford to buy their shares then their life partner could come into the business and would have a right to make decisions and take income, in many cases this is NOT an ideal scenario, especially if they don’t have the skills or expertise to run a business.
Profitability also is less likely to be affected because if shareholder protection is in place, it is likely that the business will be able to continue to trade as usual.
*Tax treatment varies according to individual circumstances and is subject to change. Information regarding taxation levels and basis of reliefs are dependent on current legislation and individual circumstances, are not guaranteed and may be subject to change.
When two shareholders are involved a Life Of Another policy is taken out. Each shareholder has their own policy with the other shareholder being the beneficiary of that policy.
A second option called Company Share Purchase means that the company owns the policy and is responsible for paying the monthly premiums. In the event of a claim, the company will receive the lump sum which can be used to buy the share from the family or estate if the other shareholder dies.
Thirdly, an Own Life Policy may be held in trust by the business. Each shareholder is responsible for taking out your own policy and put any claims into a business trust which is then used by the business to purchase the shares.
There are several different ways to value a business based on net profits, dividend yield or a multiple of profits. We will work with yourselves and your accountant to make sure all aspects of you business and accounts are taken into consideration when deciding on the correct level of cover.
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Securing the present. Protecting your future.
We are independent and are directly authorised by the Financial Conduct Authority (FCA) which assures our clients that we have no network or product restrictions, and we also have a in-house compliance team that ensures our advisers are always supported and able to give first-class advice.