BUSINESS PROTECTION – TRUSTED ADVICE, MANCHESTER

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COMPREHENSIVE COVER FOR BUSINESS CONTINUITY

EXPERTISE IN KEY PERSON PROTECTION

SOLUTIONS ALIGNED WITH FCA REGULATIONS

INTRODUCTION TO BUSINESS PROTECTION AT RAE CHARTERED FINANCIAL ADVISORY SERVICES LTD

Businesses, whether large or small, are likely to encounter the unexpected at some point. Having business protection in place is essential for allowing businesses to survive during the recovery period. Enabling the business to recover quickly and minimise the impact should the worst happen. Whether you are in a partnership, a limited liability partnership (LLP), a sole trader, or a Limited company.

Business protection can encompass the following:

Key person protection, shareholder protection, partnership protection, business loan protection, employee death in service, critical illness protection, and employee income protection. These are the fundamental aspects of the comprehensive business protection solutions that we offer at RAE Financial Advisory Services Ltd, intended to safeguard your business against potential risks like these:

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Illustration of a person in a hospital gown sitting on a bed

Let us ask you a few questions, as you are busy with work to earn a living, and you are not paying attention to the following:-

What happens to your business if your circumstances change unexpectedly, such as your premature death or illness? This is especially relevant if you were in partnership with someone else in your business.
What are the financial implications and consequences for your family and the business?
Does your business partner, if any, have the financial capital to buy your business at fair value?
What would happen to your business as a result of the loss of a key person?
What plans are in place to mitigate such setbacks or financial strain caused by the potential loss of your business's revenue, recruitment costs, hiring and training costs for replacing a key person, as well as any outstanding debts or obligations related to your business during the transitional period?

FREQUENTLY ASKED QUESTIONS FAQ

This is to retain your employees as your employees feel valued by your business, and to provide tax-efficient life cover to small or large business employees with a fixed amount of life cover (not related to their salary multiples). The life cover cost is funded by the employer, which is classed as a business expense to the employer (corporation tax relief) and is not classed as a P11D benefit in kind to the employee. This expense does not attract National Insurance Contributions to both the employer and the employee.

This Death In Service DIS can be placed in trust for the benefit of their beneficiaries and will be outside their estate.

WHAT IS SHAREHOLDER OR PARTNERSHIP PROTECTION, AND WHY DO YOU NEED IT?

All companies are required to have a memorandum and articles of association, which include the company’s name and registered office. In contrast, the articles of association outline the rules for managing the company’s internal affairs, which will cover issues like transferring and selling shares.

In the world of business, your company’s success often relies on the collaboration of its shareholders. But what if one of your fellow shareholders were to die or become seriously ill? How would their shares be handled? How is your business going to face disruption or financial strain?

In order to maintain financial security, business stability, and continuity, particularly in private limited companies with a small number of principal shareholders, following the unfortunate loss of a shareholder, it is crucial to provide a safety net. Please consider this scenario in a limited private or limited liability partnership LLP with three co-owners of a business.

Shareholder A with 25% ownership

Shareholder B with 25% ownership

Shareholder C with 50% ownership

Suddenly, Shareholder C dies or becomes critically ill and cannot continue to work.

What are the financial implications for the remaining shareholders (A and B)?
Would they like to lose control of the business and be forced to sell the remaining 50% to a 3rd party?
What would be a fair price for the remaining 50% of the ownership shareholding?
What if the deceased shareholder’s spouse does not want to sell the 50% ownership shareholding of the business and wants to get involved in the business decision-making?
Do the remaining shareholders (A and B) have the financial capital to buy the remaining 50% of the business at fair value?
Do the remaining shareholders (A and B) have a binding arrangement to buy the remaining 50% of the business at fair value?
What financial disruptions and time scale will it take to resolve this? Disputes can arise, and the business’s financial stability may be at risk, which leads to financial strain or even the dissolution of the business.

In a nutshell, from all of the above points, you need some sort of Partnership protection, which typically involves a well-defined agreement that outlines the management of the shares of a deceased or critically ill partner. The agreement assures a seamless transition of ownership by either selling the shares to the remaining partners or buying them from the company itself, ensuring a seamless transition of ownership and preventing the intrusion of an uninvolved party. The insurance payout is utilised to acquire their shares from their estate, ensuring that the remaining owners maintain control over the business and a smooth transition in the event of the death or critical illness of one of the shareholders. These are the fundamental aspects of the comprehensive business protection solutions that we offer at RAE Financial Advisory Services Ltd, intended to safeguard your business against potential risks.

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