Forbes Solicitors
Corporate eNews  August 2019

Do I need a Shareholder’s Agreement?

 

Rectification of a Disclosure Letter

 

Challenges and Opportunities in the Manufacturing Sector


 

Do I need a Shareholder’s Agreement?

This is a question we often get asked by our clients who are currently holding or are planning to hold shares in a company.

Although there is no legal requirement to have a shareholders’ agreement, every company is strongly advised that they have one. Shareholders’ agreements are a means to regulate the running of a company and the responsibilities of the shareholders, by setting out what can and cannot be done as well as providing details of the decision making process, amongst other things.  By having such agreement in place the potential for conflict arising between the shareholders is reduced and the agreement facilitates smooth running of the company.

Many may take the view that a shareholders’ agreement is unnecessary, particularly where the shareholders of a company get along or are family members. However, it is fundamental to put a shareholders agreement in place at the outset of starting any new business, rather than further down the line when opinions diverge and circumstances change, leading to potentially irreconcilable differences and detrimental effects to the business.

 

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Rectification of a Disclosure Letter

The nature of a disclosure letter is in its name, to disclose relevant points of interest to a buyer prior to the conclusion of a sale, which may be inconsistent with warranties provided by a seller in a sale agreement. As a crucial document in any acquisition, it is in the seller's interest that the information contained in the disclosure letter is sufficiently accurate and reflective in its depiction of the target business, as much as it is for the buyer's benefit.

 

The Importance of Due Diligence

When purchasing a business, whether it is a purchase of its share capital or its assets and liabilities, the buyer of the business will often undertake due diligence (the level of which varies dependent upon the size of the undertaking, the terms of the deal and the level of pre-existing knowledge by the buyer of the business concerned) of the business to ensure that it is successful and performs as portrayed by the seller.

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Challenges and Opportunities in the Manufacturing Sector

With uncertainty presented by political unrest and the fast pace at which technology is advancing through Industry 4.0, great opportunities are currently being presented to the manufacturing and engineering sector.

Whatever size your business, it is crucial to assess current business strategy, financial position and workforce, with a view to investing in operations and developing existing technology to increase productivity. When looking at production costs, businesses are suffering from poor factory and plant infrastructure. Obtaining grants and investments will allow businesses to exploit advances in technology, software and hardware. Understanding how various types of technology can be applied to your business and the legal implications makes taking advice important.
 

 

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The content of this e-alert is merely informative and should not be relied upon as a substitute for legal advice