If you are considering setting up a limited company or indeed you have been a member of a limited company for some time, it makes sense to think about how you deal with any fellow shareholders in a lot of respects. A written shareholders’ agreement can be an extremely useful tool in setting out what the expectations are of shareholders in terms of how they deal with certain aspects of company life and what is to happen when one or more of them decides to leave the company. You would be surprised at how often just sitting down to discuss the contents of a shareholders’ agreement can throw up some issues and potential bones of contention that shareholders never knew existed but that which could – if not resolved early – lead to arguments further down the line!
Some of the areas you might want to consider are:
- Do you all want the same things for the business and for your personal plans in relation to it?
- What matters will need shareholder consent?
- What do the shareholders intend to do in relation to share transfers?
- Non-compete clauses: do you need them? What will their terms be?
- What about dividends? How (and to whom) are they to be paid?
- Who is going to be allowed to appoint directors?
There are many other things that shareholders can consider – and sitting down to discuss them can greatly assist shareholders in their medium- to long-term planning and strategy for the business. The major thing to bear in mind is that you need to talk to each other to decide whether you all want to proceed in the same way!
If you need any help or guidance as a shareholder, do please drop me a line.
Rix & Kay Solicitors LLP
01825 744 447