Corporate Financial Planning

Ashton Hoyle Independent Financial Advisers offer a comprehensive portfolio of business finance and support services for all corporate clients.

When was the last time you looked at your business protection?

Failure to do so could lead to major problems!

If you are in business, failure to protect your company, partnership and key members of your staff could have disasterous implications in the event that one of you dies prematurely, or becomes seriosuly ill that you cannot work.

The following is a list of some of the more common issues facing business owners and shareholders:

Shareholding Directors of a Private Limited Company

The death or permanent disablement of a shareholding director could have a serious impact, both on the future of your business and your family. So what are the main points you need to consider?

Majority Shareholders

Majority shareholders may have important voting rights that directly affect the running of the company. In the event of a majority shareholders death, these rights will normally pass to the deceased's dependants. This could affect the company in two ways:

1. The dependants now have the right to the say in the running of the company, but probably without the necessary skills and experience. Will they share the objectives that the surviving shareholders have for the business?
2. They might prefer to receive cash for the shares they have inherited, but who will but them? Unless the remaining shareholders have sufficient liquid capital reserves, they may be sold to a third party that is involved as a competitor to the business

Minority Shareholders

Generally it is the voting rights attached to a shareholding in a private limited company that gives them a market value. Minority shareholdings may not have sufficient rights and so the shareholder's dependant's may inherit shares that are virtually worthless. The only likely buyers of such a holding would be the surviving shareholders, but they may be under no obligation to buy.

Shareholder Solution

The simple answer to both of these scenarios is shareholder protection. A legal agreement is signed by all the shareholders, who agree to sell their shares in the event of their premature death and an insurance contract(s) provides money for the surviving shareholders in order for them to buy the deceased shareholders equity in the business.

Don't forget Key staff! Keyman or Key Person

As the majority of businesses are built around people, the continued success may also depend upon the special contributions made by a small group of key 'men' or 'women'. Fellow directors or partners should also be classed as key persons. The death or disability of any of them could threaten the company's profitibility. Indeed, its future survival could be at stake.

Keyman Solution

The premature death of any key employee is likely to cause an immediate requirement for cash, so life assurance should be a main priority. However, it is not just the death of a key employee that can create serious financial burdens on the company. Today many serious illnesses, such as heart attack, stroke or cancer, no longer result in death but require lengthy periods of convalescence. A key person insurance contract can be written on the lives of key staff that would provide money for this eventuality.

Summary

If you are concerned that your business may be in a vulnerable position should one of these events happen to any of your key employees, then please contact us for a total independent, professional and detailed analysis of your business requirements.