What happens if last night a key shareholder

Died? Had a stroke? Car Crash?

The Seven Typical Stages of
Shareholders Contingency Arrangements

PROCRASTINATION

Shareholder Contingency has been thought about but no definite steps taken.

TOO BUSY

Plans have been made and the working shareholders have agreed, but the plans have not been documented properly or communicated to professional advisers.

SHE'LL BE RIGHT

You believe the company constitution or a shareholders agreement has addressed the issues. Normally just a standard Transfer of Shares (pre-emptive rights) applies, leaving all parties exposed to an uncertain situation.

MORE MONEY TO FIGHT OVER

An insurance agent has sold some policies with the intention that they are for a buy sell arrangement but no agreement has been completed. The situation is often linked to No. 5 and generally just provides more money to fight over.

NO FOLLOW THROUGH

In association with 4 above, discussions had started with a lawyer and there has been exchanges of draft documents. Often significant sums are spent on this process and there is a lingering feeling of dissatisfaction that nothing was accomplished for the costs.

SECOND OPINION

An agreement has been completed and put in place however there are usually two major factors:

a) The agreement has significant technical shortcomings.

b) The agreement has not been reviewed regularly, usually since inception, and so values and changed circumstances are not taken into account.

Either or both of the two aspects mean that the arrangements which everybody thought were in place are worse than useless.

ARE YOU HERE?

There is a good practical agreement backed by insurance in place and this has been regularly reviewed and kept up to date.