Shareholder Protection

A Company’s Articles of Association deal with the issues of transferring and selling shares – these need to be carefully reviewd together with any trusts and insurance in place to ensure the shareholder can retain control of the company.

Directors’ or partners’ share agreements may provide for the remaining directors to purchase the shares of other shareholding directors when they die. However, there is a risk that the remaining directors may not have sufficient cash available when a fellow director passes away unexpectedly. This can be remedied by putting a life insurance in place in case of such an eventuality

On death, a partner’s or directors share of the business forms part of his or her estate. This means it is often passed to the surviving spouse, or other beneficiaries, under the terms of their will. Your business may suffer as a result – especially if the interest is sold to a third party to release the capital.

To keep full control of their business, the surviving partners or co-directors need enough money to be able to buy the share of the business themselves. Life assurance for each partner or co-director, arranged under a business trust for the benefit of the others, ensures that the funds are available. It will need some care to determine the value of the business & what level of cover is required and with a growing business this figures needs to be kept under review to keep pace with that growth.

Veracity financial planning is not responsible for, nor does the Financial Services Authority regulate advice given with regard to taxation matters regard to trusts; some aspects of tax advice; commercial mortgages or second charge secured lending.