A Buy And Sell Agreement (Insurance) is essential for businesses in South Africa where multiple owners wish to establish a clear succession plan. This document is typically used when business partners want to ensure business continuity and provide certainty regarding ownership transition upon death, disability, or other specified events. The agreement, governed by South African law including the Insurance Act 18 of 2017 and Financial Advisory and Intermediary Services Act, establishes the framework for one partner or the business entity to purchase the departing partner's share using life insurance proceeds. It details the valuation method, transfer procedures, and obligations regarding insurance policy maintenance. This type of agreement is particularly crucial for private companies, partnerships, and close corporations where business interests are not easily marketable or where immediate liquidity might be required for business succession.
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1. Parties: Identification of all parties to the agreement, including the business partners and the insurance provider
2. Background: Context of the agreement, including the business relationship between partners and the purpose of the buy and sell arrangement
3. Definitions: Definitions of key terms used throughout the agreement
4. Insurance Policy Details: Specific details about the insurance policy, including type, coverage amount, and premium payments
5. Trigger Events: Events that activate the buy and sell provisions (death, disability, retirement, etc.)
6. Purchase Price Determination: Method of determining the purchase price of business interests
7. Payment Terms: Terms and conditions for payment of the purchase price using insurance proceeds
8. Transfer of Interests: Process and requirements for transferring business interests
9. Obligations of Parties: Ongoing obligations of all parties regarding premium payments and policy maintenance
10. Duration and Termination: Term of the agreement and circumstances under which it can be terminated
11. General Provisions: Standard contractual provisions including notices, amendments, governing law, etc.
1. Cross-Purchase Arrangement: Details of how surviving partners will purchase deceased partner's share - used when partners directly own policies on each other
2. Entity Purchase Arrangement: Details of how the business entity will purchase deceased partner's share - used when the business owns the policies
3. Disability Provisions: Additional provisions for handling permanent disability of a partner - included when disability insurance is part of the arrangement
4. Retirement Provisions: Provisions for handling voluntary retirement - included when retirement is a trigger event
5. Divorce Considerations: Provisions dealing with impact of divorce on business interests - included when partners are married in community of property
6. Cross-Border Provisions: Additional provisions for international business interests - included when partners or business have international presence
1. Schedule A - Insurance Policy Details: Detailed information about each insurance policy including policy numbers, insurers, and beneficiaries
2. Schedule B - Valuation Method: Detailed methodology for business valuation
3. Schedule C - Ownership Structure: Current ownership structure and shareholding details
4. Appendix 1 - Premium Payment Schedule: Schedule of premium payments including amounts and due dates
5. Appendix 2 - Transfer Documentation: Pro forma transfer documents and powers of attorney
6. Appendix 3 - Consent Forms: Required consent forms from spouses, trustees, or other relevant parties
Relevant legal definitions
Clauses
Relevant Industries
Professional Services
Manufacturing
Retail
Construction
Technology
Healthcare
Agriculture
Financial Services
Real Estate
Consulting
Engineering
Small and Medium Enterprises
Relevant Teams
Legal
Finance
Risk Management
Corporate Governance
Executive Management
Insurance
Compliance
Corporate Affairs
Business Development
Relevant Roles
Business Owner
Managing Director
Chief Executive Officer
Financial Director
Chief Financial Officer
Company Secretary
Legal Counsel
Risk Manager
Insurance Manager
Business Development Manager
Partner
Shareholder
Trustee
Commercial Director
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