Shareholder Agreements

Before entering into a partnership it is important to consider the various rights each partner is to have and the different duties expected of the partners. These expectations can then be established in a written partnership agreement. Matters that a partnership agreement may address are:

• How the capital of the partnership is to be shared. Is it to be based on financial contributions or the work done within the partnership or is it to be shared equally.
• How to share the profits of the business (or be responsible for the losses). Again this might be based on the financial contributions or work done or may be shared equally.
• How are decisions to be made
• The responsibilities of each partner
• How does a partner leave the partnership and do the existing partners have a right to purchase his or her share of the business
• Resolution of disputes

A member of our team can provide advice as to content of your partnership agreement.

It is important that no matter who you go into business with, whether friends or family or business partners, that you have considered the possibility that you might disagree with the other owners of the business about important decisions throughout the life of the business. There are many reasons why we recommend a shareholders' agreement if you are running a company, or a written partnership agreement is put in place if you are a partner in a partnership, or a members agreement is put in place if you are an LLP.

This is a contract between the shareholders of the company and sets out how the relationship between the shareholders is to operate. For example, how certain decisions will be made and who will make them, what happens when someone wants to sell their shares and leave the business and how much people will get paid for their involvement in the business. Numerous other issues can be settled in a shareholders' agreement and so, if a disagreement should arise, the shareholders can look to the agreement and hopefully settle the issue without a dispute arising.

Our team can provide help to ensure you have the right content in place in your shareholders' agreement.