Shareholder and Partnership Agreements
Going into business with other people, be it in the form of a company with others owning shares, or a partnership can be a little like entering a marriage. During the initial ‘honeymoon’ phase, everything is exciting and blissful and you could not imagine ever having an argument with your partner let alone splitting up!
Sadly however, just like marriages, business partnerships can and do fail. To prevent things turning extremely nasty you need to have a shareholders or partnership agreement in place before you launch the venture.
Shareholder Agreements
If your business takes the form of a company with more than one owner then you will need a shareholders’ agreement between you. A basic shareholders’ agreement will contain the following clauses:
- The amount of equity held by each shareholder
- Voting rights and decision making processes
- How profit will be shared
- Risk allocation
- Any restrictive covenants agreed between the shareholders
- An exit strategy if a shareholder wishes to leave the business
- A dispute resolution procedure
- Intellectual property rights
Partnership Agreements
A partnership agreement is needed when two or more parties form a business but do not form a company. The business is simply referred to as a Partnership. The terms of a partnership agreement are similar to those of a shareholders’ agreement. A partnership agreement will include:
- The name of the partnership and partners
- Retirement of partners
- How much equity each partner holds in the business
- Profit and risk allocation
- Disputes resolution
- Intellectual property rights
- Restrictive covenants
- How business duties will be spread between each partner
Contact Us To Draft Your Agreement
We have many years’ experience in negotiating and drafting shareholder and partnership agreements so call us, sooner rather than later, to dicuss and draft these important documents.
