Are you in a joint venture with friends? If you’re running a business with your trusted friends or colleagues, you’re probably worried you haven’t got anything in writing to seal that trust – a shareholders agreement. As a shrewd business owner you would want to ensure your company runs smoothly, with the power of vote exercised against every executive decision. Do you think that a handshake among friends should suffice? Think again! You must have a shareholders agreement in place to protect your rights.
A partnership can only run smoothly and successfully with a shareholders agreement that’s been prepared by an experienced business owner and corporate lawyer. No doubt you’ve seen the need to decide, for instance, how disputes should be settled and a means by which no conflicts will surface. But an essential aspect of running a business is knowing exactly the value of the company and the value of your own slice of the cake, thus maximizing the value of your business investments.
When you’re proactive in protecting your business, you’re not just protecting your interests, you’re also protecting those of others. With a shareholders agreement, everyone is protected. Consider for instance, if in future someone decides to leave the company, conflicts will surface and will not be resolved with a simple handshake – you can shake hands when agreeing on a partnership, but parting companies isn’t as easy as a handshake. Even if you have in place a document that covers many aspects of a shareholders agreement, it is highly recommended that you instruct a corporate lawyer to review it and insert overlooked and yet essential key points. For instance, without a non-compete clause in a shareholders agreement, the leaver can effectively and lawfully take the business with them.
Every shrewd business owner stretches the investment and profits of their business with a shareholders agreement in place, thus preventing conflict with the shareholders of the company. So, whether you choose to leave or remain with the company, as a shareholder you can decide to:
The options are numerous and the shareholders agreement will help you decide which option is in the best interest of your investment. A shareholders agreement is pivotal when protecting of your business assets. When drafting an agreement and before it is counter-signed, be sure to know how much your shares are worth and how much it is due to you once you leave or decide to cut your share out of the cake. Your shareholders agreement needs to be clear about all finances so everyone knows what they are due.
At DG Law we will help you ensure that your shareholders agreement is approved and signed by all shareholders, and that it is kept in a safe place where it can be easily accessed. We will help you understand that a shareholders agreement is like a prenuptial agreement, setting out what the position is when the partnership is formed and what will take place, without nasty surprises or disputes, when the relationship dissolves. We will help you consider key aspects of your business, including:
Please call us today to arrange an informal telephone discussion with one of our business lawyers. We can discuss how your shareholders agreement should be clear and concise, how it can protect your investments, how it will allow the management team and decision-makers to know where they stand, when faced with a complex issue.
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