A business run by multiple partners through a corporation in which you are all shareholders should have a shareholder’s agreement. Yes, even if you are all friends or family. In fact, it is perhaps even more important in that case! Business ventures sometimes fail and even the closest of friends can fight over how a business is being run. A shareholder’s agreement allows you and your partners to agree on many contentious points in advance of any problems arising while cooler heads still prevail.
Your agreement can set out the role each shareholder is going to play in the company and how each person is to be compensated. It can define who will be officers of the company and who is responsible for day-to-day operations. Perhaps most importantly, it can determine the process by which the relationship between the shareholders can be ended if you are no longer able to work together.
These are only some examples of the many potential problems that arise between business partners in such closely held corporations. Without a shareholder’s agreement, such issues often need to be sorted out in court at great cost to the parties involved. The requirements for your shareholder’s agreement will depend on the nature of your business and the intended relationship between you and your partners.
If you have any questions about shareholder agreements you can call us at (902) 826-3070 or email us at firstname.lastname@example.org to set up a meeting with one of our lawyers at our Tantallon law firm. You can also schedule a no commitment Issue Review Consult for $100+HST where you have the opportunity to explain your situation to a lawyer and get basic advice before deciding whether or not you'd like to retain us.
By: Dianna M. Rievaj, MBA, LLB - Founding Lawyer
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