Shareholders Agreement: Do I Need One, & Why?

handshake infront of agreement with red penWhat Is a Shareholders Agreement?

A shareholders agreement is an agreement between the owners of a company setting out how they are going to run the company together.

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Take assessment one:

My Answer was Yes but Why Do I Need a Shareholders Agreement?

Take assessment two:

Can you answer the following questions?

  1.  What happens if a shareholder wants to issue more shares in the company but there is disagreement?
  2. What happens if there is a deadlock and the shareholders cannot agree on decisions?
  3. What is each shareholders’ role and responsibility decision making power?
  4. When and how do you pay dividends?
  5. What happens if a shareholder wants to sell their shares and exit the company or dies?
  6. After leaving the company can a shareholder directly compete with the company and possibly take the company’s clients?

If you can’t answer many of these questions with certainty, they are likely to become issues and points of disagreement when the situations arise.

Okay – So What Now?

1. Protect yourselves, put a well drafted, easy to understand, shareholders agreement in place.
2. When things become strained your shareholders agreement will serve to guide you through disputes easily and fairly.

Contact PATC!

We can assist you with this process which does not need to be difficult or expensive. Contact us for assistance.

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