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Do we need a shareholder agreement

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Some things to think about

  • Is the current value of the company sufficiently large for the owners to argue about it if they fell out?
  • Is the value likely to increase significantly over the near future?
  • Do you wish to introduce new shareholders to an existing business?
  • Are there just two shareholders holding different numbers of shares?
  • Are there some shareholders who do not work in the business?
  • Would you be happy if the other shareholders sold their shares to someone you didn’t know or left their shares to someone else when they died?
  • Have the shareholders made substantially different contributions to the business?
  • Does one shareholder hold (or control) a majority of the shares?
  • Would you like clarity on how you will resolve disputes?
  • Would you prefer that a shareholder who resigned his employment should return his shares?
  • Would you be unhappy if one of the other shareholders set up in competition whilst a shareholder or shortly after s/he left?
  • As a shareholder do you want to make sure that you can always be a director?
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  • Have you informally agreed, or do you wish to agree and record any special or unusual arrangements?
  • Do you want to pay yourselves different levels of dividend?
  • As a majority shareholder, do you want to be able to force the other shareholders to join in if you want to sell to a third party?
  • If you are a minority shareholder do you want to ensure that the buyer acquires your shares if the majority shareholder decides to sell to a third party?

If the answer to any one or more of the above points is yes, then you may wish to consider obtaining advice about making changes to the Articles of Association or entering into a Shareholder agreement, or both.

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