You should put in place an option agreement with all the directors/partners of the company. When entrepreneurs enter into a business protection policy such as a shareholder protection or partnership policy, an inter-option agreement can be put in place. This type of agreement, also known as a dual option agreement (or single option agreement in the case of critical illness coverage), can help secure the transaction between the payment of life insurance and the shares. An option agreement is an agreement reached by all shareholders. It is introduced to ensure a smooth sale of the stock. Each shareholder takes a policy either on himself, where the money goes to the remaining shareholders, or to the other, where the money is returned to himself. In the event that the shares become available unexpectedly, a cross-purchase contract is entered into. As an emergency plan for the death of a partner, it is likely that a partner will take out life insurance from other partners and list himself as a beneficiary. If one of the partners dies, life insurance funds can be used to purchase the deceased`s interest. The key is to agree on how the company is evaluated while concluding the option agreement. Our corporate services team, combined with broader specializations and expertise within the company, make us the ideal choice for any company wishing to implement a shareholder protection plan or an option agreement.
The cross-option agreement ensures that if any of these circumstances had occurred, there would be one or more shareholders willing to buy the shares. A fair type of activity gives the remaining shareholders the opportunity to purchase the shares of the owner or another shareholder in the transaction, while giving the deceased`s beneficiaries the opportunity to sell it to them. Click here to download a template for the cross option agreement. Cross-option contracts and fatal illness/critical illness With a qualified and experienced team, we have helped 1,000 companies across the UK. Want to know more? Call us today and we can guide you through the process and give you an offer for shareholder protection insurance. The third major trigger for a cross-purchase contract is a partner`s retirement, while broader agreements contain a partner`s divorce clauses (to develop the legal language of the ex-spouse) or personal bankruptcy situations.