Although there is no legal requirement to have a formal shareholder agreement, it’s a good idea for any company with more than one shareholder to have one, as it reduces the potential for conflict between shareholders, helping the company run smoothly and profitably. It also outlines shareholders’ rights, privileges and obligations, and includes the foundation of how to set up, manage, and run the company. Here are four other key benefits a well-drafted shareholder agreement provides:
If you are a business owner with more than one shareholder, make the investment in a well-drafted shareholder agreement. As shareholders will always have disagreements and not always see eye-to-eye, by setting out shareholder expectations you can then focus on what’s important: the profitability of your business.