Shareholder/Partnership Protection

The death or permanent incapacity of a shareholder or partner can cause a shift in the balance of power within a business and can create financial difficulties for the surviving shareholders, partners and their beneficiaries.

For example:

If majority shareholders die voting rights that directly affect the running of the company would normally pass to the deceased’s beneficiaries. The implications for a business could be as follows - 

• The beneficiaries would now have the right to a say in the running of the company.
• If that was not a priority to beneficiaries would the other shareholders have sufficient available capital to purchase them?
• The death of a partner could lead to the dissolution of the partnership.

One salutation to such a scenario is shareholder/partnership protection.

It is therefore in the interests of all interested parties to plan and finance business continuation, in the event that a shareholder or partner dies or becomes critically ill.