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Click HERE to go to the Business Insurance Quote website, where we can provide, Key Man quotations, Partnership and Shareholder protection and directors and company officers insurance quotes
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We are able to provide cover for Partners,
officers and directors of any company, anywhere in the world.
If you require KEY MAN INSURANCE
then please Click here
Why would you need partnership or director protection
insurance?
If you are a business partner or share holding director of a business
then failure to put in place a partnership or share protection
plan could lead to major problems!
The premature death, critical illness or permanent disability
of a shareholding director or business partner could have a serious
impact, both on the future of your business and on your family.
The following are a few points you need to consider?
Majority
shareholders
A Majority shareholder of a business usually has important voting
rights that will normally have a direct impact on the running
of the company. In the event of the death of a majority shareholder,
these rights unless specified otherwise will form part of the
deceased’s estate and would normally pass to their next
of kin. This passing of shares could impact the company in two
ways:
The deceased’s
next of kin now have the legal right to a say in the running of
the company as they now hold the voting rights. However, do they
have the necessary experience? And, will they share the same vision
that the surviving shareholders have for the business?
They may well
prefer to sell their newly inherited shares for a monetary lump
sum, usually a one off payment. But who will buy them? Unless
the remaining shareholders have sufficient liquid capital, then
the next of kin of the deceased’s shareholder may choose
to sell these valuable voting shares to a third party, possibly
a hostile third party, perhaps even a direct competitor.
Minority shareholders
As we have pointed out above, it is generally the voting rights
that are associated with shareholdings of a private limited company
that makes them such a valuable asset in monetary terms. Minority
shareholders however may not have significant rights and so, in
the event of the death of a minority shareholder, the next of
kin may inherit shares that are virtually worthless. The only
people who are likely to buy these shares are the surviving shareholders.
However as these shares are effectively worthless and bearing
in mind the surviving shareholders may not be under any obligation
to buy them, then the next of kin may be unable to sell them for
any significant value.
Partnerships
In much the same way as a majority shareholder, the death
of a partner in a business could mean that the deceased partners
share in the company is normally inherited by their next of kin.
The beneficiaries of the deceased partners shares may or may not
then enter and contribute to the running of the firm. Depending
on the partnership the beneficiaries may even gain control of
the company.
The solution
The answer to these scenarios is a director share or partnership
protection plan. This is a combination of a legal agreement between
all shareholders or business partners and a life insurance policy
covering each director or business partner. The agreement means
that in the event of the premature death (critical illness and/or
permanent disability can be included as an optional extra) of
a shareholding director or business partner the surviving shareholders/business
partners agree to buy the deceased’s share in the business.
The agreement means that the beneficiaries must sell if the surviving
partners choose, and the partners must buy if the beneficiaries
choose. It is imperative that an insurance policy taken out in
conjunction with this agreement in order to provide the necessary
lump sum of money for the surviving partners to purchase the deceased’s
share of the company.
Key man insurance
We have a dedicated section on Keyman and Keyasset protection
that also offers a facility to obtain quotations online, to access
this section CLICK HERE.
If you do not have these arrangements in place or if you would
like us to review your existing arrangements as you are concerned
that your business may be in a vulnerable position should one
of these events happen to you, then please click on either of
the tabs at the top of the screen and we will either call you
back, normally on the same day or, send you the relevant information
you request.
Our Corporate Financial specialist will be able to guide you on
the correct levels of cover to put in place and then search the
whole market to find the most appropriate provider for the cover
you require.
Call 0845 130 0009
to request more information
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Partnership
protection insurance
