Shareholder Agreements

A Shareholder Agreement is a contract with a very specific purpose: to lay out the goals and expected future conduct of the parties. Shareholder Agreements are made between current and future shareholders of a Corporation.

For example, in non-publically traded companies, it is frequently advisable to have provisions in the Shareholder Agreement to deal with the death or incapacity of a shareholder. This can help provide for the smooth operation of the company even if something happens to a shareholder. Some Shareholder Agreements can also arrange for life insurance policies that will purchase a shareholder's shares upon death so the company can retain control of itself and not be subject to probate law or have its shares passed in the decedent's will.

Shareholder Agreements also provide organizational clarity. When the goals, rules and expectations are set down for all to see, there are far fewer surprises and all parties know what to expect. This makes for a more harmonious business relationship as well as a more efficient business environment.

Like any other corporate document, a Shareholder Agreement should be reviewed periodically to make sure that it still applies and is adapting as the organization grows. Along with addressing concerns that the organization has, a lawyer can point out areas that may not have been considered and prepare your organization for its bright future.

If you want to contact Owens & Perkins regarding a Shareholder Agreement, click here.