Buy & Sell Agreement – 3 or more Parties, Death & Disability

BUY & SELL AGREEMENT

 3 or more parties,

Death & Disability

Summary A Buy and Sell Agreement may be used to protect the shares of a company or member’s interest in a CC in the event of the death or disability of a member or shareholder. It is intended to be used where there are three or more shareholders / members. A Buy and Sell Agreement provides for the remaining equity-holders to buy the deceased or disabled party’s equity.

Do you only want to cover death, but not disability? We have a Buy & Sell Agreement for you.

Why do I need a Buy and Sell Agreement? A Buy and Sell Agreement sets out the procedure to be followed if a shareholder / member dies or becomes disabled. The Agreement provides for the remaining equity-holders to buy the equity, and it also refers to any buy and sell life policies that have been taken out to cover the purchase price. Standard Buy and Sell Agreements are usually associated with life insurance policies. But you do not necessarily have to have life insurance policies in place to implement a Buy and Sell arrangement.

Who should use a Buy and Sell Agreement? Company shareholders and members in close corporations should have a frank discussion with each other about what will happen to the equity should something happen to one of them, ie. the death or disability of a member or shareholder. A written agreement can be used if they decide that the remaining equity-holders would buy the deceased equity-holder’s shares / member’s interest in the event of death or disability.

What does the agreement say? The standard terms consist of: Definitions; Introduction; Policies; Valuation; Purchase Price; Delivery of Documents; Cession of Policies; Disputes; General.

What does this agreement look like? The document can be printed onto seven pages.

What do you need to do to use the Buy and Sell Agreement?

• Read the template Buy and Sell document to ensure that it suits your requirements. Make any changes as required.
• Complete Annexure A by adding in the details of any buy and sell insurance policies that may have been taken out.
• Ensure all the shareholders / members sign the Agreement with each getting a copy of the final, signed agreement.

Also viewed: Key Man Agreement

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