Directors' or partners' share agreements may provide for the remaining directors to purchase the shares of other shareholding directors when they die. However, there is a risk that the remaining directors may not have sufficient funds to hand when a fellow director passes away unexpectedly.

One way round this is to take out life cover as a source of funding.

To arrange such cover requires the understanding and agreement of all concerned. It will also require some careful figure work to determine how much cover is required. But it will be a comfort to all directors or partners of a business to know that their own or a colleague's death will leave the other directors with sufficient support to carry out the terms of their shareholders' agreement.

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