Shareholders' protection is a contingency process detailing what will happen to a
shareholder's shares if the shareholder dies or becomes seriously ill.
In the interests of
financial security, business stability, and continuity – particularly for
private limited companies
A private limited company is any type of business entity in "private" ownership used in many jurisdictions, in contrast to a publicly listed company, with some differences from country to country. Examples include the ''LLC'' in the United Sta ...
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
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Corporate law
Protection