Do you have a Shareholders Agreement?
CONSIDER THESE COMMON ISSUES
What would happen to your company if you or your business partner became so ill that one of you could no longer work – or worse still, died?
Would you still be paying dividends or making distributions of profit to that person even through he or she is not around, or to their spouse or family?
If they died and left their spouse everything in their Will (including their shares in your company), would you want to be in business with his or her spouse?
What if your business partner sold his or her shares in your company to a complete stranger or a competitor following an argument?
How are your shares to be valued and over what period will the purchase payments be made to your family? Or is there an insurance policy to fund the payment in a lump sum?
HOW CAN A SHAREHOLDERS AGREEMENT HELP?
A Shareholders Agreement can cover these not uncommon scenarios and tailor the rights and obligations of the shareholders of a company to fit your personal circumstances and your particular business to help avoid some of these potential problems for everyone’s ultimate benefit.
You may have a Will, but you may not have certainty in relation to what will happen to your family or your business in the event of your death or serious illness unless these matters are clearly dealt with in a Shareholders Agreement.
Craig Pryor is principal solicitor at McKillop Legal. For further information in relation to business succession, estate planning, litigation and dispute resolution or any commercial law matter, contact Craig Pryor on (02) 9521 2455 or email firstname.lastname@example.org