How many of you, as shareholders, are protected?

[wqkvlrdhlr]

As a Financial Adviser that specialises in business protection, It always surprises me how many of the shareholders I give advice to, haven't thought about protecting the company shares and keeping control of the business. When the shares are protected and locked into a cross option agreement, the profit can be kept secure for years. Without this, the surviving shareholders could lose a large portion of their shares to someone who may not have the business' best interests at hand.

What do you think keeps the knowledge of this important subject from the ears of those that need to hear and consider it?

 

[Mr D]

Probably because not relevant to some of us.

 

[Mark T Jones]

I'd suggest it's generally low priority, plus there is a general mistrust n the policies and the people who sell them

 

[wqkvlrdhlr]

Fair point, but to many it is highly relevant, just unknown. I'm asking why there are so many business owners who are at huge risk, do not even know about it.

Do we need a furry animal TV campaign to get the message out?!

 

[wqkvlrdhlr]

Mark:

It is a shame about that, especially when its one of the most highly regulated industries now.

I feel that the 80's and 90's perception, seems hard to get rid of!

 

[Mr D]

Fair point, but to many it is highly relevant, just unknown. I'm asking why there are so many business owners who are at huge risk, do not even know about it.

Do we need a furry animal TV campaign to get the message out?!

Perhaps you need to explain the relevance to us.
Like many I do risk assessment, this didn't show up. Still doesn't.
So not seeing the huge risk.

 

[Mr D]

Mark:

It is a shame about that, especially when its one of the most highly regulated industries now.

I feel that the 80's and 90's perception, seems hard to get rid of!

Regulated industries do allow for complaints to be made. They don't prevent problems happening.

 

[Mark T Jones]

Fair point, but to many it is highly relevant, just unknown. I'm asking why there are so many business owners who are at huge risk, do not even know about it.

Do we need a furry animal TV campaign to get the message out?!

if you pp onto the legal and insolvency forums, you will get some insight to the level of forethought & planning that goes into most businesses

 

[wqkvlrdhlr]

Mr D: For example (and one I've come across). The only 2 shareholders own a business, one dies and his shares are passed on to his wife. She doesn't want/require them and after legal advice, decides to sell them on. Although these shares in this instance didn't go to a competitor, it could have. However it did go to someone who had no interest in the forward movement of the business and just wanted to collect the income. The surviving shareholder now feels that he is doing twice the work for half the profit.

I respect your point about regulated industries however once someone has decided to make a career out of this area and not just a quick buck, the problems should have either been thought of and covered beforehand, or not happened at all.

I also understand how much forethought and planning goes into new business' but from my experience, it seems more relevant for business' that have suddenly started profiting well. Before the business was doing so well, the shareholders were probably doing everything they could to save the last penny.

 

[Mr D]

Mr D: For example (and one I've come across). The only 2 shareholders own a business, one dies and his shares are passed on to his wife. She doesn't want/require them and after legal advice, decides to sell them on. Although these shares in this instance didn't go to a competitor, it could have. However it did go to someone who had no interest in the forward movement of the business and just wanted to collect the income. The surviving shareholder now feels that he is doing twice the work for half the profit.

I respect your point about regulated industries however once someone has decided to make a career out of this area and not just a quick buck, the problems should have either been thought of and covered beforehand, or not happened at all.

I also understand how much forethought and planning goes into new business' but from my experience, it seems more relevant for business' that have suddenly started profiting well. Before the business was doing so well, the shareholders were probably doing everything they could to save the last penny.

So low incidence risk to deal with? Still cannot see the need for business protection.

 

[wqkvlrdhlr]

That was just one example but as per most things, its subjective as to the risks you can foresee. Some see one risk where others may not. It doesn't mean it is incorrect though.

Wouldn't you feel awful if this example had happened to your client and you hadn't advised them of the risk? I personally see it as my professional responsibility to inform them of every risk I see, not just the ones I think are 'high incidence'

 

[Mr D]

That was just one example but as per most things, its subjective as to the risks you can foresee. Some see one risk where others may not. It doesn't mean it is incorrect though.

Wouldn't you feel awful if this example had happened to your client and you hadn't advised them of the risk? I personally see it as my professional responsibility to inform them of every risk I see, not just the ones I think are 'high incidence'

Yes, would expect you to tell your clients what they need to know.
Telling your non clients...?

 

[wqkvlrdhlr]

I'm not sure I understand what you are meaning?
If my client is my client, I advise them. If they are not my client, I can not physically advise them can I.

 

[NickGrogan]

However it did go to someone who had no interest in the forward movement of the business and just wanted to collect the income.

Isn't that the definition of a shareholder? I'd be quite upset if Apple wanted me to help them move their business forward.

The surviving shareholder now feels that he is doing twice the work for half the profit.

Then he needs some advice on shareholder v director v employee. Nothing has changed in terms of his income.

Seems like a bad example.

 

[wqkvlrdhlr]

Well... Thanks for the warm welcome all.

It seems like you already know everything, although I still didn't get a valid answer to my question.

I'll probably just get laughed at and pushed down as I'm 'new' to this forum and have a differing view than yourself, I'd just like to say that if you cant see the risks to business' that shareholder protection with a cross option agreement can cover, should you be advising business owners?

GOOGLE: courtiers what is shareholder protection
3rd option from the top

 

[Mr D]

Well... Thanks for the warm welcome all.

It seems like you already know everything, although I still didn't get a valid answer to my question.

I'll probably just get laughed at and pushed down as I'm 'new' to this forum and have a differing view than yourself, I'd just like to say that if you cant see the risks to business' that shareholder protection with a cross option agreement can cover, should you be advising business owners?

GOOGLE: courtiers what is shareholder protection
3rd option from the top

Do many of us advise business owners on all the risks? No. We tend to answer questions and raise issues, even point out the common problems that have been experienced.

Cannot recall, in well over a decade of reading business forums, anyone ever asking about protecting shares with a cross option agreement.

Its an issue to you. It may be unknown to most.
And you don't appear to be doing a good job of selling it as an issue.

 

[wqkvlrdhlr]

Answered simply: I am not selling. I thought we were like minded individuals who could discuss without just putting others and their views down, turns out I was wrong.

 

[Mr D]

Answered simply: I am not selling. I thought we were like minded individuals who could discuss without just putting others and their views down, turns out I was wrong.

You raise an issue.
Its important to you.
Just saying you aren't doing well at getting everyone else to see it as a major issue.

Wasn't aware anyone was putting you down, perhaps some posts were deleted.

 

[fisicx]

Answered simply: I am not selling. I thought we were like minded individuals who could discuss without just putting others and their views down, turns out I was wrong.

I think you will find that most of us here will never be in the position you have set out. Me and my wife are shareholders. When I die the business dies with me. So no need to pay for any sort of protection. It's going to be the same for many small businesses making it a very low risk.

I don't ever recall this topic being discussed before in the 10+ years I've been a member of UKBF.

 

[NickGrogan]

Took a look at the website, you seem to be having the same problem on your website, confusing directors and shareholders.

For insurance purposes who values the business?

You example use £1m, but no indication of where that figure came from.

Does the valuation need to be done each year, or is it ongoing like a typical life insurance policy?

 

[Paul Kelly ICHYB]

shares are passed on to his wife. She doesn't want/require them....

To prevent this issue, just put something in the sharehlders agreement. I am not sure how insurance could prevent this or litigate if it happened!

 

[Glenn Martin]

Shareholder agreements are also equally over looked.

They should be done at the start of trading, but that is usually when everyone is friends/in love and no one wants to spend the money as the company has low value.

Once wealth is created the problem you then have is that the shareholders will not agree the terms of the agreement in case the other is deemed to be doing better out if the arrangment.