Hi, I’m a shareholder in a small business (own 40%) but don’t work in the business, not a director but there is a shareholders agreement in place. Is there any business insurance I should have in place to protect my investment?
The business should have the insurances to protect itself - Public Liability, Professional Indemnity (where appropriate), workers compensation etc..
As a shareholder you do not take any responsibility, nor any financial responsibility to the business. Unfortunately your investment in the business will always be at risk. Insurance people here may have a rabbit in the hat to protect the share value that I'm not aware of, but generally that level of risk would see massive premiums (as percent of cover).
Grab your shareholder agreement, see your accountant and business lawyer to make sure you fully understand your rights, responsibilities as well as buy/sell agreements etc..
as a shareholder I dont think you can be held responsible under the new Director Penalty Regime....which makes the Directors of companies personally liable for company liabilites such as GST, income tax and the like.
Unless you are a "shadow director" which is fancy talk for you are really actually helping to run the business but not reported as a director to ASIC.
if thats the case then your ummmmm NECK is on the chopping block just as much as the director of the company.
the thing that a liquidator or ASIC or the ATO will look at is why would you buy shares in a private company when you have no control over what goes on, and no comeback if the company blows your invesment???? If the other director is a family member of close friend, then the director penalty regime will possibly come into play, and you are possibly carrying a lot more risk than you want.
and there is no insurance for this: Director Duties are not something covered by public liability or professional indemnity.........
best find yourself a good accountant and solicitor to discuss the risks and remedies for you......