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Shareholder & Partnership Agreements
Limited companies & Partnerships are started each year by friends, relatives or former colleagues who have a great business idea and a desire to create a successful business. Few, however, appreciate the potential problems they are storing up for themselves by not having a formal agreement in place to set out the ground rules for their ownership of the business, determine the powers of each shareholder/partner or provide a method for resolving disputes between the owners.
The solution is a professionally drafted shareholder or partnership agreement.
A shareholders agreement allows the members of a company to agree a range of matters relating to their involvement in the company in advance, so that they will know what will happen in certain circumstances, rather than there either being nothing to govern those circumstances or having a default position implied which might not be that which they would choose.
It is therefore a means of ensuring that the company and its affairs are run as you wish.
Some of the main issues which might be addressed in a shareholders’ agreement which include:
Who needs a shareholders agreement?
Members of any Limited Company with more than one shareholder benefit from having a shareholders' agreement to govern issues between them not only as members of the company – which can be included in the articles – but personal matters.
Shareholders' agreements could be categorised as covering three main situations:
What could happen if you don’t have a shareholders’ agreement?
Without a shareholders’ agreement there is much more potential for disagreement between the shareholders, particularly if things start to go wrong. Even though the parties will start off thinking they have common goals and ideas as to how to reach them, those views can diverge over time for example:
When to get a shareholders’ agreement?
Now! - It is always easier to get an agreement in place whilst everyone is in agreement.
That might sound obvious, but how often do you hear that people have gone into business together saying they don’t need to spend the time and money on drawing up an agreement because they all agree about how the business will be run etc, but then down the line their views diverge or circumstances change and there is a disagreement?
That can be much more expensive and time consuming to resolve and whilst their eye is off the ball, the business they have worked so hard to build up will suffer. This puts at risk everything they have invested.
What does a shareholder agreement cost?
Solicitors Charge upwards of £2,000 + VAT for a basic shareholder agreement. We will draft one for £750 including VAT.
If you’re in business with a partner, family member or friend, or if you are about to embark on a joint venture or take on external investment, talk to us about a drafting a shareholders’ agreement - call us 01908 985046 or email us @ firstname.lastname@example.org.