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A BusinessWill ......Have youmade one?
I ask thisquestionfrequentlywhenmeetingbusinessesinSingapore,be theyaPartnership,LLPor Pte
Ltd, oftenIam met withsilence ormoreoveranawkwardpause ....
I normallyinterjectatthispointbyadvisingitisa BusinessProtectionsolution...whichwilleither
protectprofitsor coverliabilities.BusinessliabilitiessuchasBusinessloanswhichhave possiblypersonal
guaranteesattaching,orLoan Accountsor Overdraftsneedtobe covered.
So ask the question,hasyourbusinessborrowedmoneyfromthe bankor frompartner(s)?
Or if your businesshasanoverdraft,the deathof a partner(s) orDirector(s) couldcause a lendertocall
inthe loanor overdraft. Howthenwouldthisbe covered,outof reservesorcashflow?Eitherwaythis
couldbe financiallydifficultforanybusiness
Simarly,while Co- Directorsprovide the foundationof abusiness,othersmaymake avital contribution
to itssuccess,so if such a persondiesorhas a critical illness,how wouldyourbusiness'sabilitytotrade
profitablynowandinthe future be affected?Suchalosscan cause far reachingproblemsforabusiness
including,lossof relationships,aspeople like todeal withpeople theyknow andlosingakeypersoncan
meanlosingcustomerstoyourcompetitorsandmayleadto lowerprofits.Lossof expertiseandthe cost
of recruitmentcouldaffectthe profitabilityof anybusiness
Partners,DirectorsandKeyPerson(s) inyourbusinessare all drivingforcesandfoundationsforits
success.Sowhat wouldhappenif one of themwasno longerthere?Imagine if thatthe sharesof one
your partnersendedupinthe handsof someone youdon’tknow,andwhodoesnotknow your
business.Toavoidthisriskyouneedtoestablishalegal frameworkthatgivesyouandthe remaining
partnersthe abilitytobuyout the sharesof anypartner whobecomescriticallyill ordies.
Howeverwhile alegal frameworkcanensure youhave the abilitytobuy,itcannotensure youhave the
moneytoexercise thatright.Thisiswhere BusinessProtectioncomesin.

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A business will for sbr may 2015

  • 1. A BusinessWill ......Have youmade one? I ask thisquestionfrequentlywhenmeetingbusinessesinSingapore,be theyaPartnership,LLPor Pte Ltd, oftenIam met withsilence ormoreoveranawkwardpause .... I normallyinterjectatthispointbyadvisingitisa BusinessProtectionsolution...whichwilleither protectprofitsor coverliabilities.BusinessliabilitiessuchasBusinessloanswhichhave possiblypersonal guaranteesattaching,orLoan Accountsor Overdraftsneedtobe covered. So ask the question,hasyourbusinessborrowedmoneyfromthe bankor frompartner(s)? Or if your businesshasanoverdraft,the deathof a partner(s) orDirector(s) couldcause a lendertocall inthe loanor overdraft. Howthenwouldthisbe covered,outof reservesorcashflow?Eitherwaythis couldbe financiallydifficultforanybusiness Simarly,while Co- Directorsprovide the foundationof abusiness,othersmaymake avital contribution to itssuccess,so if such a persondiesorhas a critical illness,how wouldyourbusiness'sabilitytotrade profitablynowandinthe future be affected?Suchalosscan cause far reachingproblemsforabusiness including,lossof relationships,aspeople like todeal withpeople theyknow andlosingakeypersoncan meanlosingcustomerstoyourcompetitorsandmayleadto lowerprofits.Lossof expertiseandthe cost of recruitmentcouldaffectthe profitabilityof anybusiness Partners,DirectorsandKeyPerson(s) inyourbusinessare all drivingforcesandfoundationsforits success.Sowhat wouldhappenif one of themwasno longerthere?Imagine if thatthe sharesof one your partnersendedupinthe handsof someone youdon’tknow,andwhodoesnotknow your business.Toavoidthisriskyouneedtoestablishalegal frameworkthatgivesyouandthe remaining partnersthe abilitytobuyout the sharesof anypartner whobecomescriticallyill ordies. Howeverwhile alegal frameworkcanensure youhave the abilitytobuy,itcannotensure youhave the moneytoexercise thatright.Thisiswhere BusinessProtectioncomesin.