Protect The Shareholders - Quest Financial Planning

How do I protect the shareholders?

If you are a director of a limited company, you are more than likely to be a shareholder as well. (By "limited", we mean your firm’s name ends in LTD).

If you own shares, what does your company’s Articles of Association reveal about the treatment of those shares on the death or retirement of a shareholding director? In the excitement and furore of setting up the business, this may have been overlooked. If so, what follows may give food for thought.

On the death of a shareholding director within a limited company, where will the shares go? The destination could have implications on the business, the other shareholders and the deceased’s family. For example:

If the shares are inherited by the deceased’s spouse, will he/she become an active member of the management team? If so, does he/she have the expertise to carry out the role? If not, how will he/she be remunerated?
How will the other shareholders buy him or her out? Is there sufficient cash in place to do so? Is there an agreement in place to allow the shares to be bought out and is it a tax efficient method?

These are only a few of the issues which need to be addressed by Board members, directors and shareholders. If you feel that a conversation would help, give us a call on 01324 832 715 or email us.