What should be included in a shareholders’ agreement?
Issuing shares and transferring shares – including provisions to prevent unwanted third parties acquiring shares, what happens to shares on the death of a shareholder and how a shareholder can sell shares.
- Providing some protection to holders of less than 50% of the shares – including requiring certain decisions to be agreed by all shareholders.
- Paying dividends.
- Running the company – including appointing, removing and paying directors, frequency of board meetings, deciding on the company’s business, making large capital outlays, providing management information to shareholders, banking arrangements and financing the company.
- Competition restrictions.
- Dispute resolution procedures.
Regardless of the industry you operate in, it’s critical to ensure that you protect your business with a safety net. After all, it represents not only the livelihood of you and your family, but also that of your employees and fellow stakeholders.
One of the most damaging events a business can fall victim to is the death of a major stakeholder. Should a business owner die unexpectedly the event can have a serious impact on their enterprise, not to mention the shareholder’s family.
When it comes to distributing shares, family members and other beneficiaries may prefer to cash them in. Meanwhile other shareholders may wish to purchase the shares but may not have adequate funds at their disposal. This is where shareholder protection comes in extremely useful.
If your reading this and you already have such strategies in place then congratulations – however there were certain changes to the 2013 Finance Act which could have a detrimental affect of the value of the Shareholder Protection cover you have in-place – causing it to the potentially taxed on payout by up to 40%.
If you need help or advice or help with any of the above please click on Apply Today.
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