If you are a shareholder or partner of a business, do you know what would happen in the event of another shareholder or partner either suddenly passing away, or becoming critically ill?
It's a prudent measure to make sure that the funds are provided for the surviving Shareholders/Partners to purchase the shares of the deceased/critically ill person, whilst at the same time ensuring the next of kin receives their cash entitlement without delay. By taking some simple steps now you will ensure the control of the business stays with the remaining shareholders/partners, rather than passing in some part to the deceased beneficiaries.
Without a formal agreement the next of kin, if maintaining their acquired shareholding, could decide to get involved in the running of the business which may not sit well with the existing Shareholders/Partners, particular if they have no real understanding of the business. Or worse still, they may wish to sell the shares to a hostile third party or indeed a competitor.
Taking some simple steps now will ensure you don't have to have those difficult conversations with relatives.
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