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Shareholder Protection

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The value of protecting your partnership

For many business owners/directors, running a company is a time consuming and complex affair. Attention is rarely paid to what might happen if a shareholder dies, or becomes seriously ill.


In the interests of financial security, business stability, and continuity - particularly for private limited companies where there may only be a small number of principal shareholders - it is essential to provide a safety net following the loss of a shareholder:


  • Shares may go to the deceased’s family, which has no interest in the business and would prefer a cash sum

  • The company or other shareholders will want to retain control by buying lost shares - but may not have the resources to do so

  • The shares may be taken over by someone who does not share the company’s objectives - and may even be a competitor


The correct Insurance Policy allows for sufficient funds to be available in the event of the death or serious illness of a shareholder. This ensures that the company can continue to operate unhindered while the ongoing shareholder or their family receive fair compensation.

It provides documentation to enable the surviving shareholders to receive the funds free of tax. 


Benefits for shareholders


In the event of a shareholder’s death or serious illness, one of the most important things to your business is to ensure continuity. Shareholder Protection sets out the procedures and policies to help ensure that you retain control, and have the necessary funds to do so:

  • Arrange for the most appropriate transfer of shares to surviving shareholders, or the company, at a fair commercial price

  • Set up insurance policies to provide the funds to purchase the shares

  • Avoid having to draw on funds set aside for other purposes

  • Prevent the sale of shares to hostile parties, or competitors

  • Documentation to enable all transactions to be made tax-efficiently

  • Ensure the dependents of the critically ill or deceased shareholder are financially secure

  • Maintain business stability and continuity

  • Retain confidence of employees and customers


HM Revenue and Customs and the law relating to taxation are complex and subject to individual circumstances and changes which cannot be foreseen.


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