If your company has 2 or more shareholders it may be worthwhile to have an agreement in place to state what would happen to the shares if one of them dies.

This is something that nobody likes to think about – however there can be serious problems for companies if the unthinkable does happen and no proper arrangements have been put in place.

Shareholder/Partnership Protection is purely a life policy taken out to make sure that, should a shareholder die, the shares of the company remain in the hands of the other directors while the estate of the deceased shareholder benefits to the value of the shares.

The death benefits from the Shareholder/Partnership Protection Plan is paid to the surviving directors who then use it to buy the shares of the estate, often under the terms of a shareholder agreement set up in conjunction with the insurance.

Even if you already have an agreement in place and are paying insurance it is important to review the policies on a regular basis as the level of cover may not be sufficient to cover the cost of the shares if the business value has increased.

If any of this is of interest to you or you want to find out more about it then you can contact us and we will put you in touch with the relevant people.