What You Need To Know About Your Company Having A Shareholders’ Agreement
Many factors will determine whether or not your company requires a shareholders’ agreement, and your commercial lawyers from Rowe Bristol Lawyers will advise you accordingly to allow you to make that decision and take any necessary actions required to facilitate a shareholders’ agreement with their assistance.
For any company owner who is not familiar with what a shareholders’ agreement is, we have outlined the basic details below and should it apply to your circumstances, why you should approach your commercial lawyers to ask them to create one. We have also highlighted five of the main reasons why your company may wish to have that shareholders’ agreement created by your commercial lawyers.
What Is A Shareholders’ Agreement?
It is a legally binding agreement that outlines the governance and control of a company that has shareholders and sets out the relationship between those shareholders, the company’s board of directors, and the company’s employees. It should be noted that a shareholders’ agreement is not the same as the written constitution of a company, which most companies create when they incorporate.
The difference between a company’s constitution and its shareholders’ agreement, is that the constitution will outline the specific day-to-day administration of the company, decision-making protocols, and matters relating to share permissions. Alternatively, a shareholder’s agreement will focus more on the relationships as mentioned above and specifics like procedures for replacing directors, share transfers to third parties, acquisitions, mergers, and shareholder disputes.
