Lifesearch LifeSearch voted the Protection Intermediary of the Year for 2013 by Money Marketing magazine
Skip Navigation LinksHome >> Business Insurance >> Director, Shareholder and Partnership Protection
0845 678 4245

Director, Shareholder and Partnership Protection

Loss of a shareholder, partner or director

The loss of a shareholder, partner or director under a limited company can have a major impact on the success of a business in terms of ensuring continued control for the remaining partners or owners.

If a shareholding Director or Partner were to die, the implications for your business could be very serious indeed. Not only would you lose their experience and expertise but consider too what might happen to their shares.

If a shareholder dies, the company is affected in two main ways:

  1. A shareholder's rights normally pass to the deceased's dependents and they will suddenly have a right to say how the company is run. They may not want this, as they are highly unlikely to have knowledge of the business, but more importantly, nor may the company’s remaining shareholders.
  2. The dependents of the shareholder may prefer to receive a cash lump sum on death but the other shareholders may not have funds at their disposal to pay this. This may even mean shares in the business being sold, thus reducing the remaining shareholders control over the business.

The shares might pass to someone who has no knowledge or interest in your business. Or you may discover that you can't afford to buy the shareholding. It's even possible that the person to whom the shares are passed then becomes a majority shareholder and so in a position to sell the company.

A written legal agreement gives the other Directors or Partners the right to buy the shares and gives the person to whom the shares have been passed, the right to sell those shares to the remaining Directors or Partners.

To protect against these eventualities happening, each Director or Partner should take out a life insurance policy to cover a specified amount.

Our advice is free and we will provide you with a no-obligation quotation for your consideration.

What LifeSearch will ask you

When you talk to a LifeSearch Business adviser about shareholder protection, he or she will:

  • check any provision on transferring and purchasing shares that may be written in the company's Articles of Association;
  • involve your business's professional advisers when assessing the value of the company;
  • advise on corporation tax implications;
  • make recommendations on recording your intentions in the minutes of a board or partners meeting;
  • provide help and guidance with placing the shareholder protection cover in trust.

Partnership protection

As far as partnerships are concerned, if a partner dies without a formal partnership agreement in place then the partnership dissolves. A partnership doesn't have a legal identity and so each partner is responsible for the liabilities of that business. This in turn means if the business fails then it could mean the partner(s) stand to lose shares in the company and also private assets as well.

What LifeSearch will ask you

When you talk to a LifeSearch Business adviser about partnership protection, he or she will:

  • check whether a partnership agreement is in place. Many partnerships do not have one, so the first to recommend is that one be drawn up;
  • help to assess the value of the company, looking at average partnership profits, the value of goodwill and the company's net assets;
  • advise on the tax position depending on whether the individual or the partnership is to pay the premiums;
  • make sure the interests of both the business and the partners' beneficiaries are served in relation to partners' wills.
LifeSearch Business Insurance image
Help Required?

If you require help, have questions or queries or if you would prefer to speak with an adviser call:

0845 678 4245

Free and friendly advice available without obligation.

UK call centre ready to help you with your Business Insurance questions.

8.00 am – 8.00 pm Monday to Friday,
9.00 am – 6.00 pm Saturday.