In Good Company
Historically, it has been commonplace for groups of people running small businesses to do so in the form of a partnership, with the respective rights and responsibilities of the various partners being regulated by a Partnership Deed.
An ever-increasing number of small businesses are choosing to conduct their operations under the auspices of a limited company, rather than as a partnership.
Running a business as a limited company has many advantages, but it does leave open the problem of ensuring that the rights and responsibilities of the respective shareholders are properly regulated.
A possible solution to this is the making of a Shareholders Agreement. This addresses the relationship between shareholders in a fashion similar to that by which a partnership would have its affairs regulated by a partnership agreement. Equally, such an Agreement can regulate dealings between the shareholders and the company itself.
Putting a Shareholders Agreement in place early on in the existence of a company is generally much quicker, easier and cheaper to do than dealing with a dispute later in the life of the company, and trying to negotiate a settlement where no Shareholders Agreement exists. Such agreements can deal with such essential aspects of company management as the management of the company, the departure of a shareholder, and even the winding up of a company when the reason for its existence disappears. Agreements can be particularly valuable in situations where there would otherwise be deadlock between shareholders.
