Strategic And Creative Representation For Today’s Business World

Include these essential details in shareholder agreements

Apr 10, 2021 | Business Disputes

Running a company on one’s own funds has its limitations. When Florida companies grow, owners often need to search for outside investors to help fund their endeavors. Typically, investors can buy shares or stock in the company and have say in how the company runs. Because this can be tricky, it is essential that businesses have shareholder agreements. 

In the business world, contracts and agreements can ensure that everyone involved with a particular endeavor understands his or her role, power and responsibilities. A shareholder agreement can serve the same purpose. In broad terms, this agreement helps to protect shareholders by detailing the rights of these individuals and what commitments they have to the company. 

Though it may seem simple, this agreement is better used when there are many specific details included. Some of those details may relate to: 

  • The number of shares available 
  • Restrictions on transferring shares to other parties 
  • The percentage of ownership each shareholder has 
  • Buy-back options for the company if a shareholder wants to relinquish his or her shares 
  • Actions to take if a shareholder can no longer perform necessary duties due to resignation, incapacitation, death or other circumstances 
  • Eligibility requirements for board members 

Shareholder agreements can have a significant influence on how a company and those involved operate. As a result, Florida business owners who are considering bringing in shareholders will certainly want to ensure that they have the right terms in their agreements and understand what such an arrangement could mean for the future of their company. Utilizing local legal resources could help parties obtain vital information to help them decide if this is best for them.