What is a shareholder protection policy?
Shareholder protection refers to the measures taken by a UK business to protect the interests of its shareholders. This can include a range of measures such as buy-sell agreements, cross-option agreements, and life assurance policies.
- Buy-Sell Agreements: A buy-sell agreement is a legally binding contract between the shareholders of a company that outlines the terms and conditions under which a shareholder’s interest in the company can be transferred. This can include provisions for the transfer of shares upon the death, disability, or retirement of a shareholder, or in the event of a disagreement between shareholders.
- Cross-Option Agreements: A cross-option agreement is an agreement between shareholders that allows one shareholder to buy the shares of another shareholder in the event of certain specified events, such as death or disability. This helps ensure that the remaining shareholders maintain control of the company.
- Life Assurance: A life assurance policy can be taken out by a company on the life of a shareholder. In the event of the shareholder’s death, the proceeds of the policy can be used to buy their shares, allowing the remaining shareholders to maintain control of the company.
- Shareholder Agreements: Shareholder agreements are agreements that set out the rights and responsibilities of the shareholders and the company, including the process for resolving disputes, the method for appointing directors, and the company’s articles of association.
- Directors and Officers (D&O) insurance: D&O insurance provides protection to the company’s directors and officers from the financial losses arising from wrongful or wrongful trading claims brought against them.
It’s important to note that these are some of the common measures for Shareholder protection and it’s also important to consult with a legal and financial professional to understand how they may affect your business and what other options may be available.
How do I get shareholder protection?
Get in contact with one of our experts to discuss the relevance and benefits of a shareholder protection policy and whether it is the right choice for your business.