Many Private limited companies ,However very few, understand the problems they are storing up for themselves by not having a formal agreement in place to set out the ground rules for their ownership of the business, determine the powers of each shareholder or provide a method for resolving disputes between the owners.
Ashareholdersagreement lets the membersof a company to agree arange of matters relatingto their involvement in thecompany, so that they willknow what will happen incertain circumstances,rather than there eitherbeing nothing to govern
Some of the main issues which might be addressed in a shareholders’ agreement include: Financing of the company Management of the company Dividend Policy Share transfers Dealing with deadlock
Themembers of any company with more than one shareholder benefit from having a shareholders agreement to govern issues between them not only as members of the company – which can be included in the
Without a shareholders’ agreement it is more likely that a disagreement between the shareholders would come about, particularly if things start to go wrong. In a private company the value may be difficult to assess. the shareholders’ agreement can set a procedure and formula. If personal circumstances change or, for example, there is an age difference, one may wish to sell his/her shares, whilst the others want to carry on. The