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Drafting a shareholder agreement

If you run a business, you may benefit from having shareholders.

Shareholders all own a part of the business, and for this reason, they are often incentivized to push for its success.

However, shareholders - by their very nature - can create tensions and conflict that can be challenging to solve.

This is why having a clear and effective shareholders' agreement is vital to a business' success as it can help avoid legal issues between shareholders, directors, and officers.

A shareholder's agreement should address all potential issues that could arise in the future, and should outline the rights and obligations of each shareholder.

If you have questions about shareholder's agreements, their pros, as well as cons, contact Bashian P.C.

Set provisions regarding removing directors and disposing of shares

You will need to ensure that certain provisions are put in place so that the business is protected at all costs. For example, you will need to make clear that directors can be removed. Additionally, there should be restrictions put in place regarding how and when a shareholder can dispose of their shares.

Protect intellectual property

You may want to clarify that all ideas and inventions will belong to the individual rather than the company as a whole.

Address what will happen in the event of a dispute

It's not always possible to prevent a dispute from arising, but it is possible to create rules on how disputes will be dealt with. For example, you may want to state that all disputes will go through certain steps before resulting in litigation.

If you are creating a company, and you want to ensure that disputes are minimized in the future, a comprehensive shareholder agreement must be created.

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