Could your business cope with the loss of a partner or shareholder?
The loss of a partner, member or shareholding director can have a major impact on the success of a business in terms of ensuring continued control for the remaining owners.
Shareholders of a business need to think of the effect on the dependants of a deceased owner, or the position of a critically ill owner who might wish to leave the business. The potential problems that might arise can depend on the business type, the size of the business share, and the procedures laid down in the articles of association or the membership or partnership agreement assuming there is one.
In any of these situations the need to find a large cash sum would come at a time when the business is also suffering the financial impact of losing a key partner or member. So it is important that, if this happens, plans are in place for the remaining owners.
Summary of benefits
- The remaining business owners retain continued control of their business
- The estate of the deceased owner, or the outgoing critically ill owner, gets fair value for selling their share of the business
- The arrangement is set up in a tax-efficient manner