Posted by: Glenn Ferguson | Date: 21 December 2012
I am often asked to review shareholders agreements between existing shareholders and shareholders wishing to purchase a business. A question often asked is what voting rights they have.
The shareholder entering the business may reach a handshake agreement with the other shareholders to have a say in the general running and strategic direction of the business, without the responsibilities of being a director.
When the time comes to sign the shareholders agreement, the powers the shareholder thought they were to receive are nowhere to be found in the shareholders agreement.
Accordingly, if you are considering becoming a shareholder in an existing or new company and wish to protect your rights, it is important that you ask yourself the following questions:
(a) The Chairman;
(b) The board of Directors;
(c) The Shareholders.
A shareholders agreement tailored to your specific circumstances can assist the parties with:
If you require advice or assistance when entering into a shareholders agreement, or with reviewing an existing or new shareholders agreement, please do not hesitate to contact me. We have assisted many clients who are a shareholder in a business.