Protect and sustain the business with cross-insurance between partners

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By Damien Courrèges, Expert Bordeaux My Business – Financial Protection Insurance


When you create a company, surrounding yourself with the right people, the right partners is paramount. From the moment of the constitution, however, it is necessary to ensure that the life of the company and its partners is organised…


Without prevention, the disappearance of a partner has serious consequences


On the day of the death of one of the partners, financial and relational difficulties may arise for the surviving partners:

The heirs of the deceased partner become partners of the company.

The acceptance of an unwanted new partner.

Debt, to buy back the shares of the deceased partner.

The liquidation of the business to reimburse the rights holders for the amount of the deceased partner’s shares.


Organize to better manage sensitive situations

The insurance contract between partners, providing for the purchase of shares of the deceased partner, may be considered. It allows:

For associates

Allow the repurchase, with the collected capital, of the shares devolved to the heirs of the deceased partner

Avoid the risk of reselling shares to a third party to the highest bidder

For the heirs of the deceased partner

Be guaranteed to sell inherited shares quickly and under good conditions

Have capital to pay inheritance tax.

For society

The company controls the entire buyback process

The possibility of pooling premiums according to the contract

On the death of the partner, it will reduce the capital by buying back shares from the heirs with a view to cancelling them. It will then be able to proceed a capital increase by choosing a new partner

This is an advantage for future partners and a way for the company to attract new partners

To secure the guarantees, it is appropriate to formalize the obligations of the partners in the death of one of them in the partner pact.


Possible solutions to be implemented


First of all, this type of solution is formalized in the form ofa so-called pensioninsurance contract. It can be established in three different formulas.

  • The contract is signed by each partner to the profitof the otherpartners..
  • The contract will allow them to buy back the shares from the heirs of the deceased partner. It will require soua contract per associate with, the member and the insured his orherthesame person, and the beneficiariesare the surviving partners.
  • The contract is underwritten r A Associated with On la Head de his other partner.

The contract will allow the member partner to buy back the shares from the heirs of the deceased insured partner. This cross-subscription assumes the existence of only two partners. The member and the insured are two different partners and thebenefitis adhereto it.

The contract Subscribed By la Company On la Head one of the Associated with. The contract will allow la Company to buy back the shares Heirs Partner Deceased. The Company Is Adherent and benefitsArea.

Determining the units to determine the amount of the death guarantee

There are several methods of valuation of shares, such as:

  • Assessment by heritage,
  • Evaluation by results / rentability,
  • Mixed method (heritage value andresult).

Nwe favour the method by wealth (prudential value), the necessary calculations are affordable and affordable allow a simple exchange from reading the bilan of the company. Under this method, it is a question of calculating the value of net book assets (Gives the balance sheet Company), this one that can Come in calculated by two Methods.

  • Capital Social + Reserves + report To New + Result de l’subsidies and asset cuts (research and developmentcosts, repayment premiums) as well as conversion spreads,

Or maybe.

  • Equity to which dividends should be withdrawt.


The pact between partners, a more than advantageous agreement

In the event of a subscription of the IPT and PTIA guarantee, the partner’s pact is essential to avoid the qualification of donation. In addition, in all cases, this allows the tax exemption of capital in the event of death (expensive contract) when it is paid to the surviving partners.

This pact will bind the partners together and have a binding force between them. This pact will also be able to bind the heirs. If the obligation to repurchase is not materialized in the statutes, an agreement must be established and registered with the administration to take a certain date and be enforceable to the heirs and the administration.

However beware, s(i) the partner is in IPT or PTIA and if his state of health prevents him from validly expressing his will, the sale of shares in the profi(t) of his associates cannot take place until the insured partner is placed under a judicial protection regime at the request of his family.

In order to avoid using the guardianship judge in the event of IPT or PTIA to authorize the transfer of pthe arts or shares of the partner prevented, it is useful to resort future protection mandate. This mandate allows partner to designate in advance, for the day when he could no longer provide for his interests on his own due to a medical alteration mental or bodily faculties, one or more agents charged with representing him or her and planning to the terms of this representation. As the sale of shares or shares is an act of disposition, the future protection mandate must be notarized.

Today, the widespread use of the partnership pact is a good start to protection but too often lacking its financial supplement through this insurance contract of the shares. Informed upstream advice can ensure the sustainability of the company and its business.


By Damien Courrèges
Expert Bordeaux My Business
Insurance – Financial Protection
06 82 87 45 13

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