What is the name of the policy stipulating that other directors can purchase your shareholding if you become seriously ill?

The correct response is related to the type of agreement that specifically allows for the transfer of shareholding under certain conditions, such as serious illness. This agreement is commonly known as a buy-sell agreement.

A buy-sell agreement is designed to facilitate the smooth transfer of ownership of a business or shares when an owner can no longer participate due to circumstances like illness, retirement, or death. This type of policy ensures that remaining directors or shareholders have the option to purchase the shares of the exiting owner, thereby preventing external parties from acquiring a stake in the business and maintaining control within the existing team.

A shareholder agreement, while also relevant, primarily outlines the rights and obligations of the shareholders, including governance issues, rather than specifically focusing on the transfer of shares due to circumstances like illness. Key person insurance is a policy intended to protect a company against the financial loss that could arise from the death or incapacity of a crucial employee, but does not govern share transfer. A single option agreement similarly does not directly refer to managing shareholding transitions in the case of serious health issues. Thus, the buy-sell agreement is the most accurate term for the situation described.