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About Product
The LightYear Docs Buy/Sell Option Agreement enables working shareholders in a company to insure the lives of the key players, providing a pay out of an outgoing shareholder in the event of death or permanent incapacity.
► $229.00 (inc GST) - OR provided under your unlimited membership
► The master document has been signed off by Abbott & Mourly and is congruent with Australian law.
General Information
Two or more people may operate a business in a company. However in the event of death, permanent incapacity, bankruptcy and other terminating events, the arrangement may no longer be viable.
The Buy/Sell Option agreement provides each shareholder (and their assigns such as Powers Of Attorney or Executor in the event of death) with a put option for their shares to be sold at market value in a terminating event to the continuing shareholders to run the business. Likewise the continuing shareholders are provided with a call option in the event of a terminating event such as death or permanent incapacity. The funds for the payout of the terminating shareholder is life and total and permanent disability insurance and in some cases trauma insurance.
Benefits
- Sits alongside the Company constitution and any shareholders agreement - see FAQs.
- Each party has a call option over other shareholder's shares if they become incapacitated or die and likewise their powers of attorney and Executor hold a put option over their shares enabling the EPOA and Executor to sell the shares to the continuing shareholders at market value.
- Simple and quick to produce but very powerful in effect.
- There are no tax consequences for entering into the Buy/Sell Option agreement.
- Needs to be backed by life insurance on the shareholders.
Frequently Asked Legal Questions
As an accountant or financial planner can I complete this document on behalf of my business clients?
Yes. The documents have the legal sign off of Abbott & Mourly Lawyers and the interview process is locked down ensuring only names and addresses of parties are inserted, thereby the adviser does not create a legal document. However the client has a legal document with the full force of contract law.
Is it expensive?
No. Like all LightYear Docs the Buy/Sell Option agreement is only $99. It is a legal contract and provides an important exit strategy for outgoing shareholders and their family in the event of their death and permanent incapacity.
Why is insurance needed?
If the Company does not have sufficient funds to buy back the shares of the outgoing shareholder it will need other means of financing which could include borrowing but common practice will see the Directors insuring for life, permanent incapacity and potentially trauma to provide funding for the share acquisition by continuing shareholders.
I have an old Buy/Sell agreement, can it be updated?
Yes, provided all parties agree to any new terms and the lives of the shareholders remain insurable.
My shares are held in a family trust, does that matter?
If shares are held in a trust then there is additional legal work to be completed and this agreement will not cater for that directly. Please contact Tony Anamourlis of Abbott & Mourly - tanamourlis@abbottmourly.com for advice.
We don't have a shareholders agreement in place - does that matter?
You should put in place a comprehensive shareholder's agreement and this can be completed through Abbott & Mourly. Please contact Tony Anamourlis of Abbott & Mourly - tanamourlis@abbottmourly.com for advice.
How long does this document take to assemble?
Depending on the complexity of the data, this document should take approximately 10-25 secs to assemble. If you experience timing outside of this please contact Support via the Surge app, alternatively please read this article for troubleshooting tips https://info.lightyeardocs.com.au/supportcentre/troubleshooting-longer-assembly-times-timeouts .
Is this document a legal document?
All master documents have been signed off by Abbott & Mourly lawyers. Tony Anamourlis of Abbott & Mourly advises that “at no time, due to inbuilt legal protection and security measures can a user change or amend a document on the LightYear Docs platform that has been signed off by a practicing solicitor. To do so would result in the user drafting a document of a legal nature and engaging in the provision of legal services. In addition, it would be a breach of copyright. In our opinion when completing the form fields through the LightYear Docs platform, users and their employees are merely carrying out an administrative task which is not the provision of legal advice.”
However in some complex areas such as the insertion of a varied range of client instructions into a Will or other such documents the user must be mindful of the extent to which a document is being drafted by the user rather than merely the administrative task of completing a form where the relevant fields are inserted into the reviewed and signed legal document provided by Abbott & Mourly.
The above advice is born out of numerous cases dating back to Re Sanderson, Ex parte Law Institute of Victoria [1927] VLR 394, 397 where the Court held:
“if a person does a thing usually done by a solicitor, and does it in such a way as to lead to the reasonable inference that he is a solicitor – if he combines professing to be a solicitor with action usually taken by a solicitor – I think he then does act as a solicitor.”
Likewise in ACCC v Murray (2002) 121 FCR 428, 448 where Murray was building a franchise business that involved the legal writing and drafting of Wills from scratch based on the client’s personal circumstances. The Court held that this process was legal work.
Is the document easy to read?
All LightYear Docs products are written in plain English and assessed for readability. If at any time you come across any errors, please contact support@lightyeardocs.com.au.
What lawyers sign off on the LightYear Docs documents?
All LightYear documents are prepared and signed off by Abbott & Mourly from Melbourne, Sydney and Brisbane.
Are the LightYear Docs documents reviewed regularly?
All LightYear Docs documents form part of the LightYear Docs internal review process. We review all documents at least annually or when required to do so due to changes in legislation. Further details of this process and a review schedule is include on this website.