Company Bug and Drewberry have a partnership to help Company Bug readers set up Shareholder Protection.
Drewberry has helped hundreds of companies across the country with Shareholder Protection. It’s an insurance policy that pays out a lump sum to the business to buy back the shares of an absent shareholder.
We offer advice on all aspects of this cover, including:
In most cases, the remaining shareholders want to buy back the shares of an absent shareholder to retain control of the company. However, what if the company can’t afford to?
If a shareholder passes away, their shares typically form part of their estate. They then usually pass to their family, out of control of the company.
Should critical illness force a shareholder to exit the business, that shareholder retains their shares. However, they’re unlikely to be able to help run the company due to their ill health.
If the shareholder dies and the family inherits the shares, the business could get a new sleeping partner. They may not be able to contribute to running the business but are nonetheless entitled to a share of the profits.
Alternatively, the family could look to monetise the shares by selling them, perhaps even to a competitor.
Where the shareholder becomes seriously ill, they may need cash. This could be to adapt their home or fund early retirement. They may also therefore want to sell their shares.
In both situations, the remaining business owners face losing control of the company if they can’t raise the funds to buy them back.
Very good service from Rauri – he has been very helpful and thorough.