How would your Business Cope with the loss of a shareholder?
We know that protecting and minimising the risk to you and your business is of the highest importance to you and your fellow Directors. As prudent business people you will most likely have already put measures in place to protect your company, such as insuring its property, equipment, stock and vehicles.
Whilst these are all very sensible precautions, it is possible to neglect to ask yourself one very important question. If one of the shareholders in your firm were to die, what would happen to your company?
Although this is not a question any of us like to think about, the reality is that the chances of one of the shareholders in a company dying during their working life is much higher than you may think and the business consequences can be devastating.
In addition to the emotional distress and upset caused, the untimely death of a shareholder can, and often does, have severe financial implications for the surviving shareholders. Both the company and the next of kin may be faced with a number of challenges.
- Inability to buy out the deceased shareholder.
- Introduction of a new inexperienced Shareholder into the business.
- Loss of control of the business