Shareholder Protection
When a shareholder dies or is permanently disabled, the remaining shareholders need to buy out their interest. Shareholder protection insurance provides the funds to do that — ensuring the business stays in the hands of those who run it, and the departing shareholder’s family receives fair value.
Shareholder protection
Keeping control of your business when a shareholder cannot continue
Without shareholder protection, the death or permanent disability of a shareholder can create a deeply difficult situation — the surviving shareholders may not have the funds to buy out the departing interest, and the deceased’s family may end up with a stake in a business they do not want and cannot manage.
What would happen to your business if one of your shareholders died tomorrow? Would you have the funds to buy out their estate’s interest? Would you want to be in business with their beneficiaries? Would their family receive fair value for an illiquid asset at the worst possible time?
Shareholder protection insurance is specifically designed to fund the buy-sell obligations in a shareholder agreement. It pays a lump sum to the remaining shareholders, giving them the financial resources to purchase the departing shareholder’s interest at an agreed valuation.
What's Included
For shareholder protection to work effectively, the insurance needs to be structured consistently with the shareholder agreement. The valuation method, the trigger events, and the ownership of the policy all need to align. We coordinate across the insurance and legal dimensions to make sure everything is consistent.
We work with you and your solicitor to ensure your shareholder protection strategy is properly structured, adequately funded, and kept up to date as your business and its value change over time.
Shareholder agreement review and alignment
We review your shareholder agreement to understand the buy-sell obligations it creates and ensure your insurance is structured to fund those obligations correctly.
Business valuation and sum insured determination
We help you establish an appropriate method for valuing the business and calculate the sum insured required to fund the relevant share of that valuation.
Policy ownership structures
Shareholder protection can be owned individually by each shareholder or by the company. The right structure depends on your shareholder agreement, your tax position, and your business structure. We advise on the most appropriate approach.
Regular review as business value changes
Your business’s value changes over time. We review your shareholder protection regularly to make sure the sum insured remains adequate to fund a buyout at current value.
What people say about Collaborative Consulting
“I got to know John whilst working with him in developing his company’s brand principles to strengthen the emotional connectedness with his clients. During this period, I gained a deep understanding of John’s ethics and strong desire to help people both through the good times and the bad times.
His strongest desire is to make a tangible difference for his clients and future generations of their family. John has a strong sense of family, he believes strongly in wanting to contribute back to the community.
I can honestly say I have not met a financial adviser where money is not the financial driver for him, it’s much more personal, it’s about making a difference. I’d recommend anyone who wants certainty in their financial investments talk to John.”
Michael Major BA (Hons) MDM
Property Development Consultant, Future Proofing Strategist
“John is the consummate professional in the Financial Planning and Investment sector. He has walked the talk, having successfully grown and lead businesses to achieve dramatic results. Through it all, he has helped people reach their personal and professional goals and engages with them comprehensively to ensure they achieve what they need to.
There’s no nonsense with John – if you want to succeed, he will help you do it and in doing so, you will meet and be assisted by one of the nicest and most professional people I know, who also lives by a set of principles steeped in integrity. A hard thing to find these days!
I strongly recommend you contact John and get to know him. You won’t regret it.”
Warren Cummins
Managing Director, Dale Carnegie Auckland and BRS Management
“Choosing someone to look after your money is an important decision especially if you are like me and have no idea about investments.
When I left my marriage I had money from the sale of the house. As I was now on my own financially I understood that I needed to ensure that not only was my money going to be safe but would also be working for my future.
I met with a few financial advisers but none of them really instilled me with confidence. I was feeling a bit lost and frightened about making the wrong decision.
Pam Martin
Arbonne Independent Consultant
“We are all specialists in our own area of business. We love referring our clients to an equally dedicated specialist, John Milner of Collaborative Consulting Ltd.
John has been able to help our clients leverage and re-invest their hard-won gains, made both personally, and in business. John has been working in his area of Investment Expertise for a long- time, so has ridden all of those waves in the marketplace. He is committed to helping clients mitigate their investment risk, and in these days and times, his level-head and thorough but relatable approach to Investment are exactly what we all need.
He makes investing simple, effective and takes the worry away.”
James Kelso
CPA, Director, Kelso Marsh Consulting Ltd
“I have known for some time now as part of my business networking group. From the start I have been impressed by John’s professionalism and his knowledge base. John takes what he does seriously and is quite clearly very dedicated to serving his clients well.
I have no trouble recommending him to anyone in need of sound financial advice.”
Rory Laubscher
Corporate Photography Specialist Firefly Photography
Our Process
When you work with us, we use our proven 3-step system. By understanding your situation and the goals you want to achieve, we work out a unique plan to help you get there smoothly.
Shareholder protection that keeps your business in the right hands
Years of experience helping New Zealand business owners structure shareholder protection as part of a comprehensive business succession plan.
Shareholder protection insurance turns a potentially devastating ownership crisis into a manageable transition. It protects the business, the remaining shareholders, and the family of the departing shareholder — ensuring everyone is treated fairly.
Frequently Asked Questions
Have a question about shareholder protection insurance? Get in touch — we are happy to help.
What is a buy-sell agreement and how does shareholder protection fund it?
A buy-sell agreement (or shareholders’ agreement) sets out the terms on which shareholders can be bought out in specified circumstances — such as death, disability, or retirement. Shareholder protection insurance provides the funds to execute that buyout without requiring the remaining shareholders to find the money themselves.
What happens if there is no shareholder protection in place?
Without shareholder protection, the remaining shareholders may need to find buyout funds from their own resources or borrow the money at a difficult time. The deceased’s family may end up holding an illiquid share in a business they cannot easily sell or derive income from.
Does the policy need to match the shareholder agreement exactly?
Yes. The policy needs to be structured consistently with the shareholder agreement — covering the same trigger events, using a compatible valuation methodology, and ensuring the right people receive the funds at the right time. We coordinate with your solicitor to ensure this alignment.
How is the business valued for shareholder protection purposes?
Common valuation methods include a fixed agreed value, a multiple of earnings, or a market valuation conducted at the time of a trigger event. We help you choose a method that is fair, practical, and consistently applied in both the shareholder agreement and the insurance policy.
Can shareholder protection cover partial disability as well as death?
Yes. Policies can be structured to cover not just death but also total and permanent disability, and in some cases critical illness. We advise on the appropriate trigger events based on your shareholder agreement and the specific risks in your business.
How often should shareholder protection be reviewed?
We recommend an annual review, and more frequently if the business undergoes significant growth, a change in ownership, or a material change in its value. An under-insured shareholder protection policy can be almost as problematic as having none.
Do you work with businesses across New Zealand?
Yes. We advise businesses throughout New Zealand on shareholder protection via video call and phone.
Related financial advice and wealth management services
With Collaborative Consulting by your side, we can help across a broad range of financial planning needs.
Cover the revenue and operational losses your business suffers when a key person is lost — complementing debt protection for a complete business insurance strategy.
Ensure your business debts are covered if a disruption prevents you from servicing them — protecting the business from lender action.
Protect your cash flow and operational capacity during a disruption — ensuring the business can continue to service its obligations even under pressure.