How Shareholder Protection Can Protect Your Business and Family

What Is Shareholder Protection?

Shareholder protection is a combination of insurance policies and legal agreements that ensures business shares can be bought back by the remaining shareholders if a co-owner dies or becomes critically ill.

Why It Matters

Without shareholder protection:

• Shares may pass to the deceased shareholder's family under intestacy rules or their Will
• Family members may have no interest in the business but could have voting rights
• Remaining shareholders may not have the funds to buy back the shares
• The business could face disruption, conflict or even forced sale

How It Works

1. Cross-option agreement, a legal agreement between shareholders giving each other the option to buy/sell shares on death or critical illness
2. Life and critical illness policies, each shareholder is covered, with the sum assured matching their share value
3. Trust arrangement, policies are often written into business trusts to ensure efficient payment

Regular Reviews

Business values change over time, so shareholder protection should be reviewed regularly to ensure the cover amounts still reflect the current value of each shareholder's stake.

Visit our business protection page or book a consultation to discuss shareholder protection.