Amid the time-consuming, complex business of running a company, scant attention is paid to what might happen if a shareholder dies, or becomes seriously ill.
In the interests of financial security, business stability, and continuity – particularly for private limited companies where there may only be a small number of principal shareholders – it is essential to provide a safety net following the loss of a shareholder:
- Shares may go to the deceased’s family, which has no interest in the business and would prefer a cash sum
- The company or other shareholders will want to retain control by buying lost shares – but may not have the resources to do so
- The shares may be taken over by someone who does not share the company’s objectives – and may even be a competitor
Famous quotes containing the word protection:
“We cannot spare our children the influence of harmful values by turning off the television any more than we can keep them home forever or revamp the world before they get there. Merely keeping them in the dark is no protection and, in fact, can make them vulnerable and immature.”
—Polly Berrien Berends (20th century)