Shareholder Insurance Insure against the loss of a partner or shareholder
The loss of a partner or shareholding director can
have a major impact on the success of a business
in terms of ensuring continued control for the
remaining owners.
However we also need to think of the effect on the
dependants of a deceased owner, or the position of a
critically ill owner who might wish to leave the business.
The potential problems that might arise can depend on
the business type, the size of the business share, and
the procedures laid down in the articles of association
or the partnership agreement if there is one.
For example, if one of the owners of a limited company
becomes critically ill or dies:
- they or their family might want to sell their share of
the business. This could be to a competitor or some
other unsuitable buyer. If the owner was a majority
shareholder then control of the business has
been lost.
- if the outgoing owner had at least 75% of the shares
then they could also force the outright sale or winding
up of the business.
- perhaps the owner's family may wish to become
involved in the business, which may be at best
disruptive or at worst unacceptable to the other owners.
A majority shareholding allows the new owner to
appoint themselves as a director and remove other
directors, gaining day-to-day control of the business.