Buy & Sell Agreement – 3 or more parties, being legal entities, Death & Disability

BUY & SELL AGREEMENT

 3 or more parties, being legal entities

 Death & Disability

Summary A Buy and Sell Agreement may be used to protect the shares in the event of the death or disability of a company shareholder. It is intended to be used where there are three or more shareholders, with one or more of the shareholders being a legal entity. A Buy and Sell Agreement provides for the remaining shareholders to buy the deceased or disabled party’s shares.

Do you only want to cover death, and 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 dies or becomes disabled. The Agreement provides for the remaining shareholders 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. This Agreement includes the possibility of the death or disability of a key individual, should one or more of the equity-owners be a legal entity such as a company or a trust.

Who should use a Buy and Sell Agreement? Shareholders in private companies should have a frank discussion with each other about what will happen to the shares should something happen to one of them, ie. the death or disability of a company shareholder. This Buy and Sell Agreement can be used if they decide that the remaining shareholders would buy the deceased shareholder’s shares in the event of death or disability.

What does the agreement say? The Agreement consists 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 eight 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 sign the Agreement with each getting a copy of the final, signed agreement.

Also viewed: Contingent Liability Agreement

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