Part 3: "WHO" should consider a Shareholders' Agreement, and "WHEN"?

Nobody generally goes into a business thinking it will fail. Just like nobody generally goes into a business relationship thinking it will sour. Guess what? It happens.

In the third installment of this series: WHO may benefit from a shareholders agreement, and at what point in your business life cycle should you consider it? The WHEN.

Every company with more than one shareholder should consider having a well-drafted shareholders' agreement as an insurance policy against potential disputes.

But how about you? How do you know if this is worth it for your company?

Are you involved in, or advising a company, in one of the following areas... where the company doesn’t have a shareholders' agreement in place?

1. Start-ups, relying on collaboration between founders and initial shareholders;
2. SMEs across industries;
3. Family-owned businesses, which typically face unique challenges with multiple generations and personalities;
4. Joint ventures involving collaboration of multiple companies; and
5. High-growth companies looking to attract new investors.

Might be time to think about whether you should put one in place (for more, see my earlier articles: WHY? WHAT?). Any company that wants a documented agreement leading the way. This could be for you.

It follows that the sooner you have an agreement in place, the sooner that “insurance policy” is backing you.

When? Day 1. Ideally.

I've said before that it's not just having the agreement which can help. It's going through the process of working out what you want, and how you want to deal with things, before you even commence drafting the agreement, that can offer real value and help short-circuit any concerns.

As well as expertise in front-end drafting of corporate shareholders agreements, Mills Oakley has extensive experience in providing back-end advice (along the whole spectrum from initial risk management advisory work, to commercial negotiations, to full-blown litigation) for businesses from the smallest to the biggest, in all industries and at all stages of their life cycles.

Want to know if documenting an agreement may be for you? Wondering if it's time to formalise somehting? It is "too late", and something's gone sour, and you need someone to help guide you through it? Shout out.

I’m presenting on this topic in the coming months. Do you work for, with or advise SMEs? Please reach out if you’d like me to come to your workplace to present.

Phoebe Pitt

Special Counsel | Commercial Disputes & Insolvency | Mills Oakley

0466 553 643 | [email protected] | www.dhirubhai.net/in/phoebepitt/

#shareholdersagreements #disputeresolution #womeninlaw #riskmanagement

All comments are general in nature; I recommend seeking tailored advice for your business.

?