Shareholders Agreement Template

Understanding a Shareholders Agreements

When it comes to ensuring that your business is run in the best way possible, it is important that you create shareholders agreements to cover all bases. Indeed, shareholders agreement templates will prove to be highly important in many different applications, and this is true for all shareholders who have a stake in the business.

So, without further ado, we will consider what shareholders agreements are. We will also be looking at how your firm should use shareholders agreements to achieve the best possible results. Critically, we’ll also consider designing and laying out your shareholders agreement templates for the optimal success with your documents.

What Are Shareholders Agreements?

To start things off, before you can even attempt to design your firm’s shareholders agreements, you’ll need to fully understand what shareholders agreements are. The shareholders agreement serves to provide a legal document outlining the responsibility of all shareholders within your firm.

The shareholders are, of course, hugely influential in the running of a business. As a result of this, keeping their responsibilities well established in a legal document is important. Indeed, this is potentially one of the best ways to ensure that all shareholders remain happy with your firm’s management.

The Basics of Shareholders Agreements

Shareholders agreements are an agreement that the shareholders of a business ought to make at the time of becoming shareholders. The document will cover numerous vital aspects relating to the company’s management and the responsibilities of the shareholders.

The shareholders agreements are hugely important as they are responsible for providing a basis from which the shareholders’ responsibilities and powers are regulated. Without the shareholders agreements, there is the possibility that disputes could arise between your company’s shareholders.

Who Are Shareholders in my Business?

We’ve clarified now that shareholders agreements are used for setting out your firm’s shareholders’ responsibilities. However, we haven’t explained or defined what a shareholder is up until this point.

A shareholder is someone who has purchased or otherwise come into ownership of shares in your business or company. As the name would indicate, a share of a business is representative of a percentage of your business. That is to say, a shareholder who owns 50% of the total shares in a business will actually own half of the company overall. The greater the shareholder’s shares, the more influence they will have in the firm. A shareholder who only held 0.1% of the firm would still have a say, but their power would be minimal compared to a shareholder with 10% of the firm’s shares.

As a business owner, the shareholder hence also has a say in the management of the company, with their influence being determined by the number of shares they own in the firm. Hence, the shareholders agreements serve to provide some regulation and control over these responsibilities and powers.

Purposes of Shareholders Agreements

Shareholders agreements serve to protect the interests of all shareholders in a company. It doesn’t matter how big your business is, really – any business with shareholders should have a shareholders agreement to protect each shareholder’s interests.

Are Shareholders Agreements a Legal Requirement?

Shareholders agreements are articles of association and primarily serve as a guidance for companies in the event of a dispute between shareholders. They are a safeguard. However, they are not actually a legal requirement for your brand.

What’s more, you may not necessarily need a shareholders agreement in many scenarios. Suppose you and your fellow shareholders always agree with one another, and no disputes break out between the shareholders. In that case, shareholders’ agreements may be redundant. With that being said, having the agreement’s legal backing may be beneficial in the unlikely (but not impossible) event that the shareholders couldn’t see eye to eye.

What to Include in Shareholders Agreements

If you’re thinking of drafting shareholders agreements, you should start by checking you know what these agreements must contain. It should be reiterated now that they are not a legal requirement. However, there is no point in writing a shareholders agreement that won’t meet all of a good shareholders agreement template’s requirements.

Some of the most important aspects that need to be included in shareholders agreements are as follows:

• Who the directors of your business are – most shareholders agreements will cover which shareholders, if any, are directors for the business. It will also look at what their responsibilities are in this role. Moreover, the shareholders agreements should also define who is able to appoint new directors to the firm or the requirements that the shareholders must meet to hire a new director.
• Restricted matters – most shareholders agreements will cover restricted matters requiring a majority vote to be passed. Alternatively, the size of a successful vote can be defined if it is outside of just “the majority.” For example, suppose the company needs 75% votes to pass a proposal; this can be defined in the document. Some of the matters covered in the “restricted matters” section might include large business expenses or creating new shares in the firm, to name just two options.
• Exit of shareholders – sometimes, a shareholder may decide to leave the company or will otherwise leave for unavoidable reasons (e.g., ill health or death). Alternatively, they may leave due to the other shareholders not being satisfied with the shareholder in question’s competence and abilities. You should determine the exact procedure during these cases in the shareholders agreement. Terms surrounding exit are arguably one of the most important parts of most agreements between shareholders. This is because of the nature of the topic and the potential to cause major disputes between shareholders.

Always Get a Second Opinion

As with many things, it’s always important to get a second opinion on the shareholders agreements that you write. Indeed, shareholders agreements are important legal documents, in that they would be redundant if you don’t get the information right. It’s worth asking for advice from a legal professional outside of your firm for this, too. While you’ll naturally get second opinions from your fellow shareholders, these may not be entirely unbiased!

Are Shareholders Agreement Templates a Good Option?

Now, you might be wondering how you actually go about making your own shareholders agreements. Indeed, these documents can be tricky to write, and there are many different things that you should consider too! As such, a different option that might offer a good solution could be using a shareholders agreement template instead.

But are shareholders agreement templates any good? These documents can provide many benefits over trying to write your shareholders agreements alone without a template to guide you. Hence, we have listed some of the reasons as to why shareholders agreements are beneficial to help you find the top option that’s best suited to your needs.

Shareholder agreement templates can offer a plethora of benefits instead of trying to create an agreement freeform. Indeed, creating legal documents from scratch is incredibly difficult. You really need a legal background to pull this off – but shareholder agreement templates can take a lot of the difficulty out of this process.

Some of the reasons that you might want to consider using a shareholders agreement template for your new business are listed below:

• Make sure the formatting for your shareholders agreements is right. Let’s say that you choose to use shareholders agreement templates. In this case, you’ll be provided with a document that has already been formatted in a professional and effective manner for your agreement. This is important. After all, even though the shareholders agreement isn’t a legal requirement for your business, it still carries legal weight. Therefore, it needs to be professionally and effectively designed and laid out. A template can establish this for you, so that you won’t need to worry about whether you’ve listed everything necessary, whether you’ve got the order right, and so on!
• Make sure your firm is spending its time on important matters. Using shareholders agreement templates can save your business a lot of time (and money, as a result). Indeed, you will need to spend a substantial amount of time training your staff to write the shareholders agreements. They’ll need to learn how to write and format a legal document, which is naturally challenging. What’s more, they’ll also be less efficient at this than a professional, which means they may spend more time on the task than is actually necessary! Of course, this will mean they’re unable to complete their normal job requirements. As such, the overall use of the time will likely be inefficient. Of course, this is costly for your new business. By contrast, using a ready-made shareholders agreement template will make things a lot easier. Templates will save time for your staff and ensure the job’s done right the first time!
• Hiring a professional is an expensive option. Getting your own staff to create the shareholders agreements is time-consuming and inefficient. Thus, it’s a costly process to try and create shareholders agreements in-house from scratch. However, it’s also expensive to hire a lawyer to do the work for you. Either way, you’ll be looking at considerable costs – but compiling the shareholders agreements by using templates provides a balance between cost and efficiency.
• Your shareholders know the business better than anyone else. Invariably, some aspects of the shareholders agreement will need to be carefully considered based on your business model. However, a lawyer or legal advisor will not know your business like you do. Hence, they will need to spend a lot of time working with you. They’ll need to to learn about how the business works, who the brand’s shareholders are, and so on. However, your shareholders and/or staff already know this! Therefore, doing the work yourself through the use of a template could both save time and make sure the final shareholders agreement is appropriate.

Where to Find Shareholders Agreement Templates?

Shareholders agreement templates take the pressure off when it comes to creating a perfect shareholders agreement. What’s more, when you choose a shareholders agreement template that’s been designed by a professional, you can be confident that your chosen templates will do what you need them to do. There are many benefits to using shareholders agreement templates, but it’s pivotal you find the right type. Fortunately, our team can help with this. We’ve made it our mission to provide a massive collection of some of the highest quality templates for business purposes around. In fact, with over 2000 templates to choose from, it’s safe to say that we will have a template to suit your every need.

Let us give you the ideal shareholder agreement templates so you can get started the right way. Sign up to Business-in-a-Box today to get access to our massive collection of business and legal documents.