When starting a business, it`s important to have a shareholders agreement in place. This document outlines the rights and responsibilities of each shareholder and helps avoid conflicts in the future. But what exactly should be included in a shareholders agreement? Here are some key points to consider:
1. Ownership structure: The shareholders agreement should clearly outline each shareholder`s percentage of ownership and how that ownership can be transferred or sold.
2. Decision-making process: The agreement should also outline how decisions will be made, including who has voting rights, how many votes are required to pass a decision, and what happens in the event of a tie.
3. Roles and responsibilities: Each shareholder`s roles and responsibilities should be clearly defined in the agreement, including who will manage the day-to-day operations and who will handle financial matters.
4. Dispute resolution: It`s important to have a plan in place for resolving disputes between shareholders. This can include mediation or arbitration, or a process for buying out a shareholder who wishes to leave the company.
5. Confidentiality: The shareholders agreement should also include provisions for keeping sensitive information confidential and preventing shareholders from using confidential information for personal gain.
6. Exit strategy: It`s important to plan for the potential exit of a shareholder, whether that`s through a buyout, sale of the company, or other means. The agreement should outline what happens in the event of a shareholder`s death or disability, as well as what happens if a shareholder wishes to sell their shares.
7. Non-compete and non-solicitation clauses: These clauses prevent shareholders from competing with the company or soliciting clients or employees away from the company for a certain period of time after leaving.
In summary, a shareholders agreement is an important document for any business with multiple owners. It should outline ownership structure, decision-making processes, roles and responsibilities, dispute resolution, confidentiality, exit strategies, and non-compete and non-solicitation clauses. By having a clear and comprehensive agreement in place, businesses can avoid conflicts and ensure that all shareholders understand their rights and responsibilities.
