When do you need a shareholders agreement?
In at least two situations;
Why do you need a shareholders agreement?
If you do not have a shareholders agreement in place, and you disagree with any of your fellow shareholders on matters which are key to the business, how it is run, it’s strategy, or future plans, then;
This is something best avoided if possible. Not least because it is a very expensive and time intensive process, and will involve a lot of management time better spent focussing on your business.
What do shareholders agreements do?
If it is well drafted, it will cover a variety of things such as;
A good law firm will...
Only once this is done, will they go through with you a checklist of various matters they would suggest you discuss with your fellow shareholders. You are likely to be enlightened by how accommodating and collusive shareholders can be by going through this process, rather than doing nothing.
Muneeb Dean is head of corporate litigation at DBS Law