Has anyone ever told you that as a business owner that you NEED to have a shareholders’ agreement? Did you wonder what it was?
This article sets out some of the basics.
- Without a SA, shareholders can have difficulty resolving disagreements.
- Unlike publicly traded shares, shares of a private company are difficult to sell or transfer.
- The founder and majority shareholder usually wants to maintain a certain degree of control over who can become a shareholder.
- A minority shareholder who does not have voting control of the company, will be concerned about having a mechanism to transfer his or her shares if he or she wants to.
- If a company has one shareholder only, a SA is not required.
- If a company is incorporated with more than one shareholder or where additional shareholders are added, a SA is recommended.
- If the business is a partnership, the equivalent of a SA is a partnership agreement.
- If current shareholders are considering transferring shares, they may...