It is important to any business which has more than one shareholder/partner, that it has a shareholders agreement. A shareholders agreement sets out the rights and responsibilities of each shareholder, providing a process to be followed in making decisions. A well drafted shareholders agreement gives the shareholders certainty and is essential to reduce the risk of substantial legal costs, drawn out and stressful legal proceedings in the event of a dispute.
We spend time to understand your needs and tailor shareholders agreements to fit. It is best to have a shareholders agreement prepared early on in the life of the business. Shareholders agreements typically address the following matters relating to the business:
- Management of the business, including the right of shareholders to appoint and remove directors
- Shareholders and director’s meetings, requirements for meetings
- Decisions which require unanimous approval
- Rights of different classes of shares
- Transfer of shares or exiting shareholder
- A process for valuing the shares
- Non-compete and confidentiality
- Consequences of a breach
- Dealing with shares of a shareholder who dies or becomes incapacitated
Read our blog to learn about why shareholders need a formal agreement.