Whether you are a start-up founder or a seasoned entrepreneur, one of the most important legal documents you need especially when governing a business is a shareholder’s agreement. This legally binding contract is the guide for each party when it comes to their rights, responsibilities, and obligations as a shareholder, ensuring that everyone is on the same page in running the business.
Here are some important things you need to know about the power and aspects of a solid shareholder’s agreement.
The ownership rights outline the structure of ownership, including the percentage of each shareholder and their distinct rights and privileges. This segment of a shareholder’s agreement also addresses restrictions on share transfers and the process for issuing new shares.
The declaring process for achieving the company’s major decisions must be stated so that changes to structure, mergers, acquisitions, or the appointment of key executives can be carried out accordingly. This minimises the potential of having major disputes and assists with maintaining a smooth governance framework.
Resolving disputes and conflicts
With so many ideas and interests being presented to the business table, disputes and conflicts among shareholders may arise. It should be in the provision of the shareholder’s agreement that the process for resolving issues is completed fairly and efficiently.
Termination and exit strategies
A well-crafted shareholder’s agreement contract anticipates possible unforeseen circumstances and addresses them in advance to provide a concise plan, maintain the stability of the business during the time of transition, and protects the interests of all parties involved.
Engaging with local business lawyers in Geelong
A legally drafted shareholder’s agreement is not just to legalise the understanding between the people inside an organisation but also to help foster a thriving business and protect your interests and avoid potential risk and disputes in the future.
If you require assistance in drafting a shareholder’s agreement for your business, don’t hesitate to contact us at Whyte Just & Moore. Our team of experienced business lawyers understand the complexities and legal issues that may arise with shareholders’ agreement, and we can provide tailored agreements for our clients.