Most businesses start out with great enthusiasm and optimism. But what happens if one of your fellow shareholders passes away? What if a point of contention can’t be resolved, or a shareholder dies or becomes embroiled in matrimonial proceedings?
Unless you are an entrepreneur going it alone, a shareholder agreement between the several shareholders of a business should be negotiated and completed before capital is injected and the business started to protect the interests and set out responsibilities of the shareholders. The preparation of a shareholder agreement requires an understanding of the business and the respective contributions of the participants, the distribution of decision-making powers and responsibilities, the different roles of active and passive participants, the most suitable methods of dispute resolution and the appropriate methods of providing for the ultimate purchase and sale of shares between the shareholders or to others. The commercial lawyers of our firm can help participants in a business to put these agreements in place and we recommend that this be done at the beginning of the enterprise, where the objectives of the participants are agreed and before disputes or problems have arisen. A little planning upfront can save a large headache down the road.