What is a shareholder?
Shareholders are the individuals that own the company. They have shares of the company by providing capital. And they own portions of the company depending on the shares.
A shareholder is a person whose name is entered in the share register. It contains information about the members and shareholders of the company. this can be one or more shares of a company.
What is a shareholder agreement?
A shareholder agreement is also is an arrangement. It aids company shareholders to arrange the division of shares. It also directs how a company should be operated. it also outlines shareholders rights and obligations.
Having a shareholders’ agreement is a cheap way. This helps to reduce any possible business disputes. And it provides a structure and procedures for solving the issues between owners.
Why does your company need a shareholder agreement?
Every company with many shareholders is advised to have a shareholder agreement. Shareholder agreements ensure that the running of the company. and makes sure the responsibilities of the shareholders are well thought through. there is clarity and certainty as to what can or cannot be done. and decisions are taken by compromising and discussion. As a result, it will reduce the potential for conflict between shareholders. thereby allowing your company to run smoothly and profitably.
Benefits of a shareholder agreement
- The agreement works in combination with a company’s articles of association. there for giving shareholders greater protection.
- A shareholders’ agreement can contain any arrangement agreed between the shareholders. It can vary what would otherwise be the legal position without it.
- The right for a shareholder to hold a seat on the board of directors. Deciding on the chairman of the board of directors.
- A shareholders agreement will remain private and confidential. It will not be open to view by others such as creditors or non-member employees.
- Shareholders’ agreement is a cheap way to reduce business disputes between owners. This is by providing a framework and procedures for dispute resolution.
- It assists in raising finance from banks or creditors. and also demonstrates the stability of the business to other potential partners.
- It prevents situations where changes in one shareholder’s personal circumstances affect the company. Safeguarding each shareholder’s financial interest in the company. And the interests of the shareholders’ families in the event of the death of a shareholder.
- A shareholders agreement protects the rights of minority shareholders. Also protects the investment value of their shareholding.
Why does your company need a shareholder agreement?
Every company with many shareholders is advised to have a shareholder agreement. Shareholder agreements ensure that the running of the company. and makes sure the responsibilities of the shareholders are well thought through. there is clarity and certainty as to what can or cannot be done. and decisions are taken by compromising and discussion. As a result, it will reduce the potential for conflict between shareholders. thereby allowing your company to run smoothly and profitably.
Would you like us to draft a loan agreement for you? or have any questions regarding loan agreements? please feel free contact us.
