Shareholders’ agreements are important business documents that spell out how shareholders of the company will work together. Once drafted and signed, it becomes the guiding document for how business decisions are made, disputes are handled, rights and obligations are upheld, and financial decisions are made.
While the best time to create a shareholders’ agreement is during the formation of the company, one can be entered into at any time so long as the shareholders are willing.
The biggest asterisk to “any time,” however, is that once a conflict does arise between partners, the opportunity for more level-headed resolution has likely passed.
Why You Need a Shareholders’ Agreement
Just because you have a shareholders’ agreement doesn’t mean your company will operate without issues. You and your partner(s) may still bump heads about decisions and policies – and that can be a healthy part of growing your business. But with a documented agreement, you’ll have greater control and protection over how the business is run and what should happen if you want to dissolve the partnership – rather than leaving its fate to the courts.
Drafting the agreement can also be an exercise in ensuring compatibility. Through the process of creating your agreement, you and your business partners will work through many difficult decisions and conversations pertaining to the company. In doing so, you may find that you are generally on the same page…or not. Chances are good that if you can’t come to terms about business decisions now, it will be mighty difficult to do so later.
Shareholders’ agreements are private business documents that give you greater control over the future of your business and put important legal protections in place for all parties.
Even if you are months or years into a business relationship, it’s not too late to draft one with the help of a small business attorney. Not only will it put you in the driver’s seat about how you want your business to operate, it is also far, far cheaper than ending up in lengthy court battles over disputes with your business partners.
For help getting started with a shareholders’ agreement for your Florida business, contact us at Silverberg|Brito, PLLC.