What Does a Shareholder Agreement Need to Include?
When it comes to starting a company in the Bay area, competition is still going strong, and it can seem like a new challenge is around every corner. After you have gone through the gauntlet of selecting a name, securing trademark protection, and selecting the proper entity for your business, you may feel like taking a nap. But don’t hit the bed just yet! It is time to start thinking about drafting a shareholder agreement.
What is a Shareholder Agreement?
A shareholder is anyone who owns a partial interest in your company. If there are more than two shareholders in your company, you should have a shareholder agreement. This agreement essentially outlines the rights and responsibilities of shareholders and stipulates many possible events, such as what happens to shareholders’ shares if they die or leave the company. The shareholder agreement will also include rules that are vital to the preservation of the company, such as prohibiting shareholders from selling their shares to third parties without approval. In a broader sense, the shareholder agreement also outlines how the company will be run and can even include procedures for its dissolution. The shareholder agreement should also include the terms for terminating the employment of a shareholder and the voting requirements for decision-making.
Why Hire a Lawyer to Draft Your Shareholder Agreement
As you can see, the shareholder agreement includes a lot of elements that are vital to the proper functioning and sustainability of a business, and if you don’t have experience drafting these agreements, it can be easy to leave out critical information. Mistakes made in a shareholder agreement can have a detrimental impact on the company and may lead to costly and unnecessary litigation down the road. In fact, many errors and oversights made in a shareholder agreement can result in the dissolution of the company. For this reason, it is important to rely on experts. A small business attorney can help draft a custom shareholder agreement for your business that meets your needs, protects your business, and supports your long-term goals.
Why Consider External Counsel to Draft Your Shareholder Agreement
If your business is concerned about the cost of employing a lawyer, it is a good idea to consider external counsel. Unlike an attorney who you keep on your payroll 24/7, external counsel allows you to have an attorney on-call, and only pay for services when you need them. Your external counsel can have an ongoing relationship with your business so that they can help you anticipate and address potential legal issues. External counsel also has the benefit of having their own firm of lawyers behind them to consult with if you have a unique or complex legal situation arise.
Contact Coepio Legal to Schedule a Consultation
If your Bay Area business requires a shareholder agreement or other legal assistance, the experienced attorneys at Coepio Legal are ready to help. Contact Coepio Legal today to schedule a consultation.
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