If you`re a startup, you`re likely to have multiple stakeholders, which makes having a shareholdersâ agreement an absolute necessity. In the startup world, things change rapidly, which means having a comprehensive agreement in place can help avoid misunderstandings between shareholders, prevent lawsuits, and ensure all stakeholders are on the same page. Here are some tips to consider when creating a shareholdersâ agreement.
1. Define the purpose of the agreement
A shareholdersâ agreement should clearly outline why the agreement is being created, the objectives of the agreement, and how it will benefit all stakeholders. It should also detail what happens in the event of a breach of the agreement.
2. Set out the management structure
As part of the agreement, youâll need to establish how decisions are made, who makes them, and how they are implemented. This can include details of directors, a board of management, and voting rights for shareholders.
3. Outline shareholder rights and responsibilities
The agreement should detail the rights and responsibilities of all shareholders and how disputes will be resolved. These rights and responsibilities can include the ability to buy and sell shares, restrictions on how shares can be transferred, and how to deal with conflicts of interest.
4. Determine how dividends will be paid
If you`re issuing dividends to shareholders, the agreement should outline the process of how dividends will be paid, when they will be paid, and what percentage will be paid.
5. Determine how shares will be valued
The shareholdersâ agreement should outline how shares are to be valued in the event of a sale or transfer of shares. This can include an independent valuation, or a mutually agreed upon value.
6. Address buyout options
In the event that a shareholder wishes to leave the company, the agreement should outline the process of how they can sell their shares or how the remaining shareholders can buy them out.
7. Address ownership changes
In the event that a new shareholder wishes to join the company, the agreement should detail how the shares will be issued, the percentage of ownership they will have, and their rights and responsibilities.
Creating a shareholdersâ agreement can be complex, but it is a critical document for managing relationships and the future of your business. By implementing these tips, you can ensure that your agreement is comprehensive and effective in protecting all stakeholders` interests.