In the event of a shareholders death or critical illness, company ownership can be passed onto family members who are unfamiliar with the operation of the company prompting issues around the day to day running of business. In particular, where the shares are unquoted, there is a limited market meaning shareholders and their families can end up in a deadlock unless sufficient protection is in place to facilitate a sale.
- Available funds
Lump sum payable to remaining shareholders
A suitable agreement ensures the right parties can request the transaction
Release of equity from share sale to the family of deceased/ill shareholder
Prevents unconnected individuals needing to become involved in the company
Shareholder protection is important to ensure that the best interests of remaining company shareholders and the family of the deceased/critically ill are all taken into account.