A shareholders Agreement is designed to do two things;

1. To regulate the interaction between the shareholders irrespective of their majority or minority stake in the company
2. To regulate how this relationship is terminated when a shareholder leaves the company voluntarily, compulsorily, or upon death.

This commentary will focus on the major provisions of a SHA. Different clients want different provisions depending upon their circumstances. There are no right or wrong answers as to what should or should not be in a SHA. What is important is that all the shareholders agree that they are happy to sign up to whatever is in it.

Please remember that a SHA is not a tablet of stone. Shareholders can agree to do something else if they wish at any time provided they agree to do so. Please document any changes to avoid disagreement as to how the SHA has been changed. A SHA is like an insurance policy; it documents what will happen if something goes wrong, or hopefully what might go wrong in the future if there is no change of direction. If this situation does come to pass, and there is no SHA, such disputes can become very acrimonious, protracted, and costly.

All businesses will buy and/or sell something, whether it be goods, services or both. Doing so creates a legal relationship between the parties whether they realise it or not. As general contract law and statute (Sale of Goods legislation for example) may not apply, and if it does, probably will not cover every eventuality, then having a set of Terms and Conditions (T&Cs) is probably a good idea.

Does one size fit all?

Usually not. Although T&Cs say roughly the same thing, each business is different, and therefore T&Cs are best if they are tailor-made. Using a set of T&Cs which do not fit into your businesses’ method of working is likely to ensure that you come unstuck at some point.

For further information click here Terms and Conditions for a Business