Just implementing a policy without the correct agreements in place could cause your family to receive an unexpected inheritance tax charge, so that’s why we work with our accountants “LR Accounting” to ensure we insure the right people in the right way to protect your business and make sure that the surviving shareholders have control and not a third party.
In essence If a major shareholder of your company dies, the remaining shareholders will receive a lump sum pay-out to enable them to purchase their share of the business. the reason for doing this is to stop someone from ever inheriting the shares or purchasing the decided shareholders shares and becoming someone who would be able to have a controlling say in the running of the business.
The most optimal way to set up a Share Protection Insurance Policy, is to typically have the policy accompanied by a Cross Option Agreement. This will traditionally stipulate that if a major shareholder dies, the other shareholders will have the ability to be able to purchase their shares in the business. This will enable the company directors to be able to keep the company running as smoothly as possible.
We have provided you with a small sample of bullet point, to give you a better understanding of how the process will work. And the reasons why setting up Shareholders Protection could be beneficial for you. If you wish to learn more about Shareholders Protection then Contact LR Connections to arrange a time to talk to one of our advisers that is convenient for you.
The procedure is as follows:
Advantages of Shareholder Protection