Ten Dangers of Not Having a Shareholders Agreement

Here you can download our 10 Dangers Of Not Having A Shareholders Agreement booklet. An example of the useful information you can find in the booklet is featured below.

1. Business v Friendship?

Many businesses start off as a shared idea between two or more friends or family members. Investing in and running a new business is demanding and can test the strongest personal relationships. Clearly recording the terms of engagement with fellow shareholders early on may be a little uncomfortable but is critical as negotiating with each other under stress later can become costly.

2. Has There Been A Fair Contribution By All?

Investing in a new business is not always done by an equal input of cash. Some participants may contribute “sweat equity”, namely their skills and talents without which the business would not be able to operate. Matching equity can be fraught with difficulty and can leave investors resentful of each other. A bespoke Shareholders Agreement will help set out clearly what contribution is expected from each Shareholder.

3. Rights And Obligations Of Sharebolders

A business relationship by its very nature is one of co-operation, reward, contribution and occasionally sacrifice. A Shareholders Agreement can be drafted in such a way as to put in writing what the rights and obligations of each of the investors are. These can cover a host of issues, such as fair decision making processes, level of devotion expected by each to the business, payments of dividends, participating on the board and other important rights and obligations.

4. Are Others Controlling Your Money?

If you are a money investor, do you know what your money will be used for and are you comfortable that it will yield a return on your investment, or could it be squandered or spent against your expectations? Should there be controls imposed on expenditure and if so what should they be? These should be made clear before investing and recorded in a writing.

IN ORDER TO FIND OUT MORE ABOUT THIS SUBJECT AND THE ANSWERS TO THE QUESTIONS LISTED BELOW, DOWNLOAD OUR HANDY TIPS BOOKLET HERE.

ALTERNATIVELY, CONTACT THE TEAM ON 020 7841 0390

5. What Matter Should Be Reserved?

6. Are You Staying Or Leaving?

7. Are You A Good Leaver Or Bad Leaver?

8. Can You Get Rid Of Shareholders?

9. Can Other Shareholders Get Rid Of You?

10. Certainty

Should you require any further assistance at all with these matters, then please contact one of our corporate specialists on 020 7841 0390 and we will be happy to discuss this with you.