A lot can impact a business. Issues with supply chain, poor sales and the weather are just a few examples. One of the most serious events can be the loss of a shareholder. With many businesses relying on the expertise and/or equity they provide, the loss of a shareholder through death or critical illness can have a devastating impact on the future of the company.
Without a plan in place a shareholder’s equity would pass to their estate, potentially meaning your business is part-owned by someone with no interest in the future of the company. Shareholder Protection Insurance provides surviving shareholders with the funds to purchase the shares from a third-party.
Business protection policies are designed to cover the financial impact of the death or serious illness of personnel within the organisation.
Alan Boswell Group will provide advice on the full suite of business protection policies available to you and your business and can recommend a solution tailored to your needs.
Yes, if paid for by the business. Often shareholder protection is purchased by the individual and therefore payments would be made from previously taxed income. But if the business pay the premiums then it is taxed as a benefit-in-kind.
There are many ways to evaluate a company value, including applying a multiple of the net profit of the company. Also, Market Capitalisation is an option for businesses large enough to have issued shares and is the value of each share times the number of shares available.
No, there is no legal requirement for shareholder protection. But, it makes good business sense to ensure that equity in the business is not owned by people with little to no interest in the success of the firm.
Relevant life insurance does not include critical illness cover and is designed to pay out to the estate of the deceased.
Shareholder protection, alongside a cross option agreement is specifically used to enable the remaining shareholders to purchase the shares of the deceased at a fair and agreed price.
If a partner within a partnership protection policy passes away then this would trigger a claim. Assuming a successful claim this would result in a pay-out being made to the business to be used to purchase the share of the partnership from the deceased’s beneficiary – usually their partner or children.
If a partner withdraws from a partnership the policy would have to be cancelled. If the share of the partnership has been sold to another individual a new policy could, of course, be opened up in the new partner’s name.
Covid-19 has highlighted the importance of protecting businesses and decisions made. As well as contingency plans, it also means having appropriate management liability insurance (MLP). We explore directors’ liabilities and how MLP can mitigate financial losses.
Credit insurance compensates businesses when customers default on payment or become insolvent. We explore how agricultural and horticultural credit insurance can safeguard your farm or food business from financial loss.