Two ways to introduce new shareholders into your company as part of your succession plan:

1. sell them some of your shares

2. freeze your shares and then let the new shareholders subscribe for shares for a nominal value.  An estate freeze is more fully described in the blog post below.

Estate freeze and introducing a child you may not want to be a shareholder

Both methods are effective in introducing new shareholders into the business.  However, the first way requires the new shareholders to pay real fair market value consideration for their shares.  This can be a large $ amount. Some business owners prefer this method because it ensures that the new shareholders have a vested interest and real obligation from purchasing their shares.

The second way only obligates the new shareholders to purchase shares for a nominal cost.  This ability to sell shares at a nominal cost is a common outcome of an estate freeze.  Generally this method is used in family situations where a new generation of owners become shareholders of a company.

If you are considering introducing new shareholders into your company, you should seek advice from your advisors and explore these two (and many potential other) alternatives.

Learn, think, apply!