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As a new business owner, shareholder agreements and putting them together can be a real challenge.
To begin, you must draft a shareholder agreement as soon as you can in the start up phase to protect the interests of your shareholders, and to prevent any prejudice towards any of them. The shareholder agreement sets out rights and responsibilities, and acts as a contingency plan in the event of disputes.
The shareholder agreement must include clear and practical approaches to resolving the inevitable disputes that will occur, as well as the day to day running of the company, and plans in place for incidents such as the death or illness of a shareholder.
Like we have already established, shareholder disputes are going to be unavoidable in your company, which is why a well written shareholder agreement is key.
Here are some of the common reasons for shareholder disputes –
- Lack of a shareholder agreement
- Dividends not being paid
- Conflict(s) of interest
- Information being withheld
- Deadlock situations between shareholders
Where there is a dispute between shareholders, there should be a resolution clearly defined.
Ideally, you do not want disputes to end in court proceedings or liquidation of the company.
In the absence of a shareholder agreement, your best bet is mediation between those in dispute, chaired by expert legal advisors who will aid the resolve.
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Keywords: Shareholder advice