If you are the head, founder or primary owner of a company in Wisconsin whose stock is publicly traded on the stock market, you have shareholders to answer to. As stockholders own bits and pieces of the business, they expect to know what is going on with the company and they expect you to protect their rights as shareholders. A quality shareholders’ agreement is what you need to protect the company and its stockholders.
What information would I find in a quality shareholders’ agreement? Can I draw up this contract myself? What happens if there is a breach of contract?
A quality shareholders’ agreement contains a lot of information. It starts with a preamble that identifies all parties. Following the preamble, there is a list of recitals — which is a list of goals. After establishing agreement goals, the contract will outline the details of a shareholder’s company ownership, as well as have details about share values, transfers, buy-backs and payments. Along with this information, a quality agreement will include:
- A first refusal clause
- Insurance policy information
- Dispute resolution methods
It is a lot of information, but it is better to be thorough when it comes to these agreements.
Why seek legal help with shareholder agreements
Anyone can download a standard shareholders’ agreement off the internet and call it a day. That may be quick and inexpensive, but it may end up costing you in the long run. The simple truth of the matter is, shareholders’ agreements need to be written in a certain way. Language in this type of contract matters, as do the details. A standard form will not have the language and details that fit your specific needs. Legal counsel can create an agreement that truly works to protect you and your shareholders.
Dealing with a breach of contract issue
If a breach of contract occurs, legal counsel can help you deal with it — whether the breach is on your end or if it is the result of shareholder actions. Sometimes talking things out will resolve the situation and sometimes such issues require litigation.
Keeping a company running smoothly and keeping shareholders happy is a lot of work. Shareholders’ agreements, quality shareholders’ agreements that is, can keep the relationship between the company and its shareholders in a good place as everyone will know what to expect from each other. With the right assistance, you can draft qualify and binding agreements with which all parties are satisfied.