Partners & Shareholders

Every business, with more than one owner, should have a shareholder agreement. This goes way beyond the standard Constitution, which is rarely helpful.

Nicholas Clayhills

Experience dictates that businesses with thought out partner / shareholder agreements survive longer.

“Straight to the point, honest and informative. Experienced advice regarding matters dealing with … partnerships.”

Jeremy YeoKhoo
ing is an internal contract, which provides the business owners with a framework for running the business, settling disputes and getting out of or even pricing and selling the business.

No one looks at the Constitution unless someone wants to enter or exit the business, or when a fight is brewing.

It’s the rules of how to get in, get our, fight, or what happens if you compete, retire, go mad or die that you find in a shareholders agreement. They deal with all the disaster scenarios in advance and save a load of stress if and when disaster strikes.

Common Partners & Shareholders Questions
Checklist for business agreements (internal)

The following handy guide, is a starter for setting up or improving your internal business agreement with business partners and shareholders:

  1. Structure – Is a partnership, company or trust appropriate;
  2. Parties – Individuals, companies or trusts;
  3. Guarantee – By individuals of obligations of a partner which is a company or a trust;
  4. Date of commencement – New or continuing partnership;
  5. Scope of business – How is the business to be described;
  6. Business name;
  7. Premises – Leased or owned;
  8. Duration of business;
  9. Assets – Partnership or individual assets;
  10.  Profits – How divided;
  11. Directors fees and shareholder dividends;
  12. Incoming partners / shareholders – Business valuation;
  13. Payments to outgoing directors and shareholders;
  14. Retirement – When and how;
  15. Death – Consequences;
  16. Expulsion – In what circumstances can a partner be expelled;
  17. Sickness – What happens if you are sick;
  18. Restrictive covenants;
  19. Management issues – Internal controls; and
  20. Dispute resolution.