Each shareholder in a limited company has certain rights which are defined by the class and number of shares that they hold.
A shareholders’ agreement protects these rights and provides contingency planning for the future.
Once a shareholders’ agreement is drawn up and agreed by all parties, it sets in writing a clearly defined strategy to protect the company’s assets and avoid disputes if there are anticipated or unforeseen events in the future.
We can draw up shareholders’ agreements, so you protect your assets in the future.
Q: Do shareholders’ agreements cover what happens to the company in the event of death, mental or physical illness or divorce?
A: Yes. Your shareholders’ agreement will ensure that assets are distributed per your wishes in the event of a director’s death. It will also protect the company’s business assets, making sure that the assets don’t form part of the director’s estate.
This means there cannot be any pressure from the director’s family around selling or agreeing to a share price.
The agreement can also feature a plan to follow in the event of a director's mental or physical illness so that you can maintain control of the company.
In the case of a divorce of a director shareholder and the need to sell or transfer shares, the shareholders’ agreement will establish a strategy to maintain control of the company.
Q: Can shareholders’ agreements cover retirement strategies?
A: Yes. Your shareholders’ agreement will cover retirement strategies so you can establish a pre-defined business succession plan.
When a shareholder/director wishes to retire, the agreement will set out the financial details for the sale of shares, normally giving co-directors the option to buy. This avoids any potential disagreements.
Q: What about internal management disputes or external claims against a shareholder?
A: You want to maintain continuity of control in your company so your shareholders’ agreement will cover what happens in the event of internal management disputes or protection against creditors.
Q: And in the case of wanting to close down the business?
A: The shareholders’ agreement will cover how to wind up the company when all parties no longer wish to continue, particularly regarding the distribution of the company’s assets.