Shareholder Protection

You may need to think about Shareholder Protection if you are concerned about any of the following questions:

In the event of another Shareholder's death -

Who will receive the shares that belonged to the deceased? 

If they pass to their spouse then would you want the spouse to become involved in the business?

Would the spouse add value to the business or be unable to contribute effectively?

Would the spouse even want to be involved in the business?

Will you or the business have the funds available to buy the shares from the surviving spouse?

Would you be happy if the surviving spouse sold the shares to the highest bidder or a new third party?

In the event of your death -

Who will receive your shares? 

What value will your family be able to receive from the shares?

How would you feel if they had to sell the shares for less than they were worth?

How would you feel if the shares stopped paying a dividend and the company started to fund the remaining Director's pensions and enhanced salaries?

In the event of a critical illness -

Would you want to continue working or be able to contribute in the same way as before?

Would the business be able to support you if you were unable to work?

Would you want to be able to realise your share value at a time of your choosing if you weren't going to return to work? 

How would the business compensate you?

Would the business like to have the funds available needed to buy back your shares at a fair value?

 

The above can raise a lot of issues.  You may also want to consider how your fellow Directors and shareholders would react to the same questions.