Is there an Agreement in place?
The concept of a shareholders' agreement is similar to that of a marriage contract except it involves all the shareholders of a corporation and their relationship with the company and each other. If there is only one shareholder of the corporation, an agreement is not needed, however, if there is more than one, it is strongly recommended those shareholders develop an agreement to govern the corporation's management and administration. Having an agreement in place can help minimize disputes between shareholders and ensure all shareholders are treated in a fair and equitable manner. A shareholders' agreement is also commonly referred to as a buy-sell agreement as it usually sets out how to deal with shareholders' interests when it is time to divest of their shareholdings.
Here are some questions you may want to ask yourself:
Therefore, the following are some of the main elements commonly addressed in a shareholders' agreement:
Drafting a shareholders' agreement is a dynamic process that includes honest and open discussions between all parties. These discussions are easier upfront rather than after an incident.
Any further questions? Please contact SMART Business Solutions on 0359 11 7000 or reception@smartbusinesssolutions.com.au
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