What would happen if one of your shareholders or partners were to die suddenly? Without making the proper provision, the impact of such an event could be very serious to you and your business.
In most situations the shareholders/partners/directors shares often pass to the surviving dependents or other beneficiaries under the terms of a will. This can have a major impact on the running of the business.
1) The dependents are now share holders and have a say in running the company. They may have different objectives to the deceased partner.
2) The dependents might decide to sell the shares. These shares could very well be sold to a third party.
A simple solution to these scenarios is to set up a partnership/shareholder agreement with protection insurance.
A partnership/shareholder agreement is a legal contract between all of the partners and shareholders, who agree to sell their company shares in the event of their premature death. Shareholder protection insurance policy will provide the money for the surviving shareholders to be able to afford to purchase the deceased shareholder’s shares, helping to maintain the security of your business long term.
3R can help you set up the agreement between the separate parties and also find the best insurance policy that will provide your business with the cover that best meets its needs.