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Insurance for expatriate directors |
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Expatriate
director insurance and protection |
If
you are a business partner or joint share holding
director of a business outside of the UK then
failure to put in place a partnership or share
protection plan could lead to major problems!
The premature death, critical illness or permanent
disability of a shareholding director or business
partner could have a serious impact, both on the
future of your business and on your family.
The following are a few points you need to consider?
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Majority
shareholders
A Majority shareholder of a business usually has important
voting rights that will normally have a direct impact
on the running of the company. In the event of the death
of a majority shareholder, these rights unless specified
otherwise will form part of the deceased’s estate
and would normally pass to their next of kin. This passing
of shares could impact the company in two ways:
The deceased’s next of kin now
have the legal right to a say in the running of the
company as they now hold the voting rights. However,
do they have the necessary experience? And, will they
share the same vision that the surviving shareholders
have for the business?
They may well prefer to sell their newly inherited
shares for a monetary lump sum, usually a one off payment.
But who will buy them? Unless the remaining shareholders
have sufficient liquid capital, then the next of kin
of the deceased’s shareholder may choose to sell
these valuable voting shares to a third party, possibly
a hostile third party, perhaps even a direct competitor.
Minority shareholders
As we have pointed out above, it is generally the
voting rights that are associated with shareholdings
of a private limited company that makes them such a
valuable asset in monetary terms. Minority shareholders
however may not have significant rights and so, in the
event of the death of a minority shareholder, the next
of kin may inherit shares that are virtually worthless.
The only people who are likely to buy these shares are
the surviving shareholders. However as these shares
are effectively worthless and bearing in mind the surviving
shareholders may not be under any obligation to buy
them, then the next of kin may be unable to sell them
for any significant value.
Partnerships
In much the same way as a majority shareholder,
the death of a partner in a business could mean that
the deceased partners share in the company is normally
inherited by their next of kin. The beneficiaries of
the deceased partners shares may or may not then enter
and contribute to the running of the firm. Depending
on the partnership the beneficiaries may even gain control
of the company.
The solution
The answer to these scenarios is a director share
or partnership protection plan. This is a combination
of a legal agreement between all shareholders or business
partners and a life insurance policy covering each director
or business partner. The agreement means that in the
event of the premature death (critical illness and
/or permanent disability can be included as an optional
extra) of a shareholding director or business partner
the surviving shareholders/business partners agree to
buy the deceased’s share in the business. The
agreement means that the beneficiaries must sell if
the surviving partners choose, and the partners must
buy if the beneficiaries choose. It is imperative that
an insurance policy taken out in conjunction with this
agreement in order to provide the necessary lump sum
of money for the surviving partners to purchase the
deceased’s share of the company. The insurance
policy can be arranged in a currency decided by you.
If you do not have these arrangements in place or if
you would like us to review your existing arrangements
as you are concerned that your business may be in a
vulnerable position should one of these events happen
to you, then please click on either of the tabs at the
top of the screen and we will either call you back,
normally on the same day or, send you the relevant information
you request.
Our Expatriate Corporate Financial specialist will be
able to guide you on the correct levels of cover to
put in place and then search the whole market to find
the most appropriate provider for the cover you require.
Keyman Insurance
We have a dedicated section on Keyman and Keyasset
protection that also offers a facility to obtain quotations
online, to access this section CLICK
HERE.
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Great British Finance
Limited are authorised and regulated by the
Financial Services Authority (FSA). The FSA
does not regulate some forms of Mortgage, Inheritance
Tax Planning, Credit Cards, Personal Loans,
Deposit Accounts & Insurance. If you are
submitting an online request, we would advise
to read our KeyFacts statement, links are at
the top and bottom of this page. |
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Questions? support@finanz.co.uk
Phone: (+0044) 0845 130 0009 Fax: (+0044) 0845 370 0021
©2003-2006 Godbold and Great British Finance Limited, E&OE. All Rights Reserved.
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