Shareholder Agreements

It’s important to have written agreements before starting any joint project, no matter how casual the relationship. A written shareholders’ agreement is a way for those who have a stake in a business to agree terms between them to control how a company is to run.

Why is a shareholders’ agreement important?

A shareholders’ agreement is important as it can cover many issues not dealt with by the Memorandum of Incorporation of the company, or company legislation itself. Where there is no agreement in place for your company, shareholders are typically treated equally and share dealings are governed by legal rules that may not necessarily take into account the aims of the founders of the business.

How can we help you

Many provisions within a shareholders’ agreement operate as voting agreements – the parties bind themselves to exercise their votes as shareholders to put into effect their agreed intentions as to how the business will be funded, run and developed. For example, issues include:

Activities the company will carry on, and its intended rate of growth
The intended exit route and timescale for achieving it
How share capital can be issued and shares transferred
How business decisions are to be made
How profits should be shared
What happens if a third party, such as an investor, wants to buy into the business

Once you have an idea of what issues you would like to include in order to protect your business, or if you would like to find out more about shareholder agreements generally, contact us for an initial free chat.

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