Shareholders Agreements and Partnership Agreements

Much like terms and conditions for a start-up business, Shareholders’ Agreement and Partnership Agreements are a crucial first stage that new businesses should consider.  Shareholders’ Agreements relate to limited companies and aim to cover the relationship between the shareholders who own the company.  They will deal with issues such as voting rights and first refusal on shares if one party wishes to sell.  We like to view these documents as something of a ‘roadmap’ setting out how shareholders can and should interact with each other and the process of setting one up at the outset of a company is an excellent way for all parties to consider difficult issues before they even arise.

Partnership Agreements are equally as important.  They are appropriate for a partnership business structure and they regulate the partnership.  With a document of this nature the operation of the partnership is made so much clearer and all partners know where they stand.  The risk of proceeding without a Partnership Agreement is that the partnership would then fall back on the provisions of the general law and these may not strike the balance between the partners that you want in your specific circumstances.

As with terms and conditions, preparing these documents at the start-up of the business focuses the mind of the parties involved and ensures that key questions are considered before these become a problem further down the line.