A Shareholders Agreement is a contract between the members of a company (also known as shareholders) and the company itself.
Many companies with more than one shareholder choose to enter into such an Agreement so they can make special rules for the ongoing management, operation and financing of the company as well as arrangements for adding or removing shareholders.
Every company with more than one shareholder should have a Shareholders Agreement. It helps to clarify expectations and avoid costly disputes.
You can set out the contribution that each shareholder is required to make – services, money, intellectual property (whatever they have promised to deliver) and what happens if they let the company down.
Founding a company with a business partner and no Shareholders Agreement is akin to building a house on a wet slab. It's a big risk and things can go pear-shaped very quickly.
Fortunately, with a little planning and attention to the agreement between co-founders, your company can avoid the hassle and expense of legal disputes down the track.
