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Does your company need a shareholder agreement?

On Behalf of | Apr 19, 2021 | Business & Corporate Law

Growing a business is no easy task. Florida entrepreneurs will need to rely on their own skills and know-how as well as external resources. In some cases, thriving as a company means obtaining financial backing from outside investors who essentially purchase a stake in the company. These investors are often known as shareholders, and it is important that a shareholder agreement is implemented if this type of arrangement is being considered.

Shareholders can act as a crucial part of the success of a business. However, it does mean that founders of a company may need to relinquish some control over the way operations are carried out. Shareholders, particularly those with significant shares, typically have the ability to make certain decisions about the company and the direction in which it moves. An agreement could ensure that everyone involved knows what they are getting into.

Some details to consider including in a shareholder agreement include:

  • Goals of the agreement
  • The number of shares available
  • What the rights of the shareholders are
  • How shares can be sold or transferred
  • The responsibilities of shareholders
  • How the payment of shares will be handled in the event that the company is sold
  • Pricing of the shares
  • How new shareholders are incorporated

Of course, like many business agreements, a shareholder agreement is a document that Florida business owners could customize to suit the needs of the company. However, it is essential that the document is legally binding. As a result, fully understanding state laws regarding such agreements, the benefits of having the agreement and other related information could prove useful.