If you are setting up your own business, you must have a heady mix of excitement and anxiety that encourages you to do more. Boarding on a joint venture with a friend or business partner requires constant commitment and cooperation to get success. However, if things go wrong in a joint venture, it is very hard to think ahead.

Solicitors can come up with the best-laid plans. For instance: A well-drafted shareholder’s agreement serves as a manual to manage disputes, that further saves your valuable time and expenses.

Here are some compelling reasons that you can consider to create a shareholder’s agreement:

Dealing with disputes

There may be times when you and your partners will not be on the same page, which can also invite disputes. The conflicts in views under critical circumstances, and bitterness between the members, calls for making provisions in the beginning.

A shareholder’s agreement should be made, keeping in mind situations where you will need to reach arbitration. In addition, the agreement should also include exit strategies clause for shareholders to part ways during unforeseen circumstances.

Run your business in an efficient way

As a business owner, you would probably want to have control over the major decisions your company takes. Most ordinary decisions are made at the will of the board members. If you want to have a say in important matters of the business, it is important to introduce a clause in your agreement that favours your decision-making.

For instance: Decisions related to issuing shares or carrying out massive expenditures should take place with the consensus of major shareholders. 

Do not rely on company law

While companies are strictly subject to company law, a shareholder’s agreement can vary your legal position through other provisions. A diverse dividend policy, for instance, can allow different dividends to be paid as per the class of share held. This policy can also have an additional clause that could restrict who may or may not acquire shares.

A shareholder agreement can also be included with ‘tag along’ provisions that enabless a minority shareholder to ‘tag on’ to a majority shareholder in a share sale situation.

Finance and investment

An agreement can provide better benefits than helping you raise funding from banks, creditors, or other potential partners who may be looking for investing in your company.

The best solicitor in Waterford can compose a shareholder agreement that points towards a solid business structure with trust and confidence of other shareholders too.

Sharing percentage of employees

Company shares are often held by directors and significant employees of the business, but what if one or two of them may resign or leave? Perhaps, other shareholders would want them to sell their shares otherwise, and they could still be entitled to dividends.

A shareholder’s agreement should ensure that individual’s shareholding must be linked to their employment. That way, at the time of exit, the employee who is departing from the company is enforced to offer their shares up for sale.

Plan for the future

Most companies are being set up as a small business or virtual partnerships. However, things change, relationships change, and business strategies need to change too, as time passes.

In the same light, if you have a good shareholder’s agreement in place, you think about other possibilities ahead and to create flexibility in the agreement to deal with the possible changes as the business grows.

If you do not have a shareholder agreement yet, ask for assistance by getting in touch with the best solicitor in Waterford to draw it up for you today. Make sure your solicitor offers you a competitive costs, a quick turnaround, and a professional and customized service to accommodate all your business needs.

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