• February 2019
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What are some good resources on founders’/shareholders’ agreements?

What are some good resources on founders’/shareholders’ agreements? by @R44D

Answer by Raad Ahmed:

It’s true that there are a number of online resources that are readily available that explain shareholder agreements. However, I would like to remind you that there is no substitute for a quality start-up attorney. They can provide insight and counsel for creating the most solid agreement that covers everything you need it to. Why take the chance of missing something that may be incredibly critical to the overall success of your business.

It’s easy to overlook something and make small mistakes that lead to big consequences. I want to share with you a few of the top mistakes that startups make in these types of agreements.

Create agreements with personal relationships in mind

Often times, shareholders have a history of friendship or family. This can greatly impact how they craft their shareholder agreement because they base it on emotional ties rather than business interactions. If you happen to have a personal connection to any of the other founders or shareholders, then you definitely need a third-party to make sure that you are looking at your business from a professional perspective.

Fail to thoroughly consider challenges or issues

When you create a shareholder agreement, you have to think long-term. Relationships and economic climates change over time, and you have to be prepared for such changes and how you will manage them. Every single member needs to be on the same page when it comes to understanding issues and how you plan to solve them moving forward.

Assuming other agreements will suffice for a shareholder agreement

Just because you establish any sort of agreement, it does not mean that it is the same as a shareholder agreement. Different documents define different things and you should establish a shareholder agreement clearly so that all potential issues are covered and you don’t have to rely on other information to guide you through any disagreements—that can get incredibly confusing and messy very quickly!

These are just a few of the many, many problems that you can face if you don’t construct a shareholder agreement appropriately. While researching and understanding the agreement is useful, it’s also important to reach out for advice from a professional.

LawTrades would be happy to connect you with a startup attorney. Our services have already assisted over 1000 businesses just like yours. We understand the importance of clearly defining your business from the very start so that you are situated for success. Check out our website for more information and to set up a consultation.

What are some good resources on founders’/shareholders’ agreements?

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