Shareholders Agreements

Shareholders Agreements are a must for any company with more than two Directors playing an active role in the business of the company

Shareholders Agreements will:

  • Provide a framework for how you intend to run the company and what shareholders’ obligations to the company are;
  • Show prospective investors that your company is well-managed, and allows you to set in stone the terms for how the company is to be run in the future; and
  • Reduce liability in providing clear guidance in the event that any disagreements or disputes arise between any business owners in the future.

If you’re still not convinced that a Shareholders Agreement is necessary, think of it as a pre-nup for your company.

It not only directs how important decisions are made within the company, but it also sets out clear rules on what is considered an exit event or a material breach, requiring a particular shareholder to exit the company.

If a shareholder does wish to exit, however amicably, Shareholders Agreements can help the remaining shareholders navigate their departure and how shares may be issued, transferred or disposed of.

Having a Shareholders Agreement in place from the outset enables you to be in the driving seat on the future direction of your company. You can set all of the important terms, with any future shareholders simply signing on to the Shareholders Agreement you have already created.

Without a Shareholders Agreement already in place, a new investor may be able to dictate and take control of the form of any future Shareholders Agreement.

For more detail on exactly what Shareholders Agreements cover, check out our Blog posts on Shareholders Agreements and growing and succession planning for your business:

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