The Importance Of Shareholder Agreements
What happens when things go wrong?
POSTED BY JONATHAN VOWLES ON 01/10/2019 @ 8:00AM
If you are in business, then you already understand the importance of both contracts and terms of business. However, not many business owners appreciate the need for a shareholders agreement ...
Shareholder agreements are vital to any business with more than one shareholder or owner!
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If you are in business with more than one shareholder or owner, then you need to have one in place. Like a lot of business contracts, you only really need a shareholders agreement when things go wrong.
"But, boy oh boy, do you need it then!"
And it is far too late to put them in place retrospectively even if you could. When business owners disagree, it can lead to stagnation in the business. Strains on the business owners, the staff and on the business owners' families. Strains that can be immense and easily avoided by a simple written agreement.
Like a lot of contracts, a shareholders agreement says what happens when the business goes right ... and more importantly, what happens when it goes wrong?
If you are in business with more than one director or partner then, for example, what happens if:
A shareholder dies and their spouse won't sell or won't agree on a price for the shares?
A shareholder divorces and wants to raid the business for cash?
One of the shareholders is no longer fully committed and not pulling their weight?
The shareholders disagree about how to drive the business forward?
A shareholder sets up in competition?
One shareholder has a personal guarantee over the businesses loans, and the other hasn't!
If your business has more than one shareholder/business owner then you need a shareholder agreement, do give me a call on 01234 752 566 or click here to ping me an email and let's see how I can help you.
Until next time ...
More about Jonathan Vowles ...
I've been an accountant in and for business since 1987 and have a wide experience of consultancy, audit, accounts, taxation and wealth planning work from individuals and small businesses to multinational corporations and charities.
My eclectic interests in growing and developing business span a number of areas, which can be summarised as strategic business advice and tax saving advice.
I have worked with the Chamber of Commerce to deliver courses for people about starting up in business and have lectured about tax for a major accountancy practice and for Milton Keynes College.
I relax by reading fiction and by getting away from the office in a campervan.
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