Those who run their own business can be forgiven for concentrating too much on day to day issues and never finding the time to think and plan for the unexpected.
Whilst applying equally to partnerships, shareholding directors of non-quoted companies should ask themselves the following questions;
- What will happen to my shares on my death?
- Would my spouse or children prefer to retain the shares or receive their cash equivalent?
- How would the other directors raise the cash to purchase my shares?
- Failing that, would they welcome my heirs involvement in the business?
- How long would the business be able to pay me if I was off work for a long period of time due to accident or illness?
- Have we drawn up a Shareholders Agreement to cover these and any other issues?
- Have I made a Will?
In our experience, most small to medium sized businesses have not addressed these issues. This omission could call into question the very survivability of a business. With our help and advice, our clients know that, should the worst happen, they have the required funding and documentation in place to ensure the survival of the business and the appropriate transfer of shares for cash, in accordance with a professionally constructed Shareholders Agreement.