If Your Business Lost A Shareholding Director, Would It Survive?

Howard Schaverien
Senior Consultant
Capital Solutions
howard@capital-solutions.org.uk

Your company is probably working harder than ever. The experience and expertise of the directors at the top of your organisation will be crucial in steering it through what may be the toughest trading period in its history.

But what happens if one of those directors, who is also a shareholder in your business, dies or becomes critically ill?

Of course you’d miss their presence, as well as their experience and expertise. But do you know what would happen to their shares?

An uncertain future

The dispersal of a director’s shares could have a significant impact on your business’s stability. The shares might pass to another individual who has little knowledge or interest in the business.

They may even gain significant control of the company and take decisions that may not be in the best interests of the other directors, employees or customers.

You could always make arrangements to buy those shares back, but could the remaining directors afford to do so?

Mitigate the risk

Depending on your circumstances and the structure of the business, there are a number of ways to ensure that the business can continue to run.

One solution is to insure against the loss of key personnel.  It could be that a shareholding director becomes incapacitated and cannot make decisions for the business.

Succession planning is a good idea to make sure there is someone to step in if required.  This could be a team member who is groomed for the role.

There are interim managers who can step in and help a business at this difficult time.

All these may well require additional, unforeseen, funds.

For advice on the best solution for your business, call us on 01582 343090 or email howard@capital-solutions.org.uk or take a look at our website http://www.capital-solutions.org.uk/busprotection.html

Capital Solutions is a trading name of Capital Solutions (csl) ltd, an appointed Representative of Openwork Limited which is authorised and regulated by the Financial Services Authority

 

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