Shareholder Protection
Why Shareholder Protection?
Shareholder protection tends to be ignored amidst all the day to day concerns of running a successful business. However, it is vitally important for private limited companies with a small number of principal shareholders to consider what would happen if one of their shareholders were to become critically ill or pass away.
Ramifications of such an event can include:
- Shares being passed on to dependents who have no interest in the business and would prefer a cash sum.
- Other shareholders losing control as a result of not having the resources to buy back lost shares.
- Shares being taken over by a competitor.
Benefits include:
- Transferring shares to remaining shareholders at a fair price.
- Avoiding having to draw on funds set aside for other purposes.
- Preventing the sale of shares to competitors.
- Helping to make all transactions tax efficient.
- Helping to ensure the financial security of the shareholder’s dependents.
- Maintain continuity in the business.
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