Shareholder Protection Insurance


The company has four working directors who are equal shareholders. Having grown the company significantly in recent years they now believe that the company is worth around £2m based on discussions with their accountant.


The shareholders were keen to ensure that should one of them die the remaining shareholders would be able to acquire those shares and retain ownership of the company without these shares falling into the hands of an unwanted third party. In addition, they were also personally keen to ensure that their own dependents were able to obtain value for the shares should something happen to them without prolonged delays.


After referring to the company’s Articles of Association and establishing if any pre-exemption clause existed we provided a Cross Option Agreement for consideration by the shareholders and their legal advisors. This Agreement provided the shareholders with the ability to exercise an option to purchase the shares in the event of an individual’s death and for the individual’s own beneficiaries to exercise an option to sell the shares, with each other party being required to comply. This is an extremely tax efficient means of preserving Business Property Relief on the value of the shareholding.

To ensure that the necessary funds would be available to allow the transfer of shares to take place, life cover of £500,000 was effected on each of the four shareholders. Each policy was placed under a business trust for their co-shareholders thus providing them with the financial means to acquire the deceased shareholder’s shares from the beneficiaries. It also provided the beneficiaries with reassurance that they would be able to obtain settlement for the shares without the worry of how the remaining shareholders could finance the purchase. 

This is an example and is for information only and should not be deemed as advice. We recommend that you seek independent financial advice prior to taking any course of action.
If you have a question or just need to talk please get in contact with one of our experienced advisors.
Central Investment Services (Scotland) Ltd is Authorised and Regulated by the Financial Conduct Authority. Registered in Scotland No SCO54118. Registered Address: 33 Albyn Place, Aberdeen AB10 1YL

We are entered on the Financial Conduct Authority Register No 114793 at  The Financial Conduct Authority does not regulate taxation and trust advice and some aspects of employee benefits.

Terms & Conditions | Privacy Policy

📞 +44 (0) 1224 657000