Shareholder protection for business owning clients looking for a fair solution

What was the situation?

We were approached by three shareholders of a business. Two were married to each other but the third was unrelated.

They had a successful business and were keen to establish a fair solution for future business proceedings should something unthinkable happen to a shareholder.

What was the issue?

In the event of a shareholder passing away unexpectedly the shares would have to be reallocated. Knowing this, all three had agreed that any proceeds should remain in the company rather than be allocated to spouses. This was even more important to the couple and they were keen to ensure a fair solution long term.

They approached LDN Finance for our help in getting protection insurance organised.

What was the process?

To achieve what they were looking for we knew that shareholder protection was required. This is designed to benefit surviving shareholders and business owners so that in the event of a claim, surviving shareholders can fund the purchase of the deceased’s shareholding and retain control over the business.

By having this plan in place, all three shareholders knew that they could fairly purchase the remaining shares if something were to happen to them, thereby benefiting the shareholder making the purchase, and also the beneficiaries – in this case the family of the deceased shareholder.

What was the solution?

Our team worked hard to obtain three equal shareholder policies to ensure a level playing field amongst the trio. What’s more, schemes like these are paid for by the business meaning the shareholders didn’t pay for the policies personally and they were also incredibly tax efficient.

We successfully leveraged our innovative processes and industry relationships to get all three shareholders preferential terms versus what would have been achieved if they approached the conventional market. This was highlighted by the fact that two of the three applicants had already started exploring terms with a different provider and received quotes but due to us having all necessary information, we did not have to go back to the client to obtain new doctors reports and medicals. We were able to handle all the medical information in house, helping to improve efficiency and convenience.

They were delighted with the outcome and knowing that this protection was in place offered them peace of mind as they move forward with trading.

Contact us to speak to one of our protection advisers today.