subject: Shareholder Agreement in US Corporation by:Nemelou Despuez [print this page] A shareholder agreement provides solutions to every possible problem which may arise in any business. With this written contract, people will also know their responsibilities and duties to the corporation.
According to corporate lawyers, a shareholder agreement should be crafted in a way that it will meet the needs of a corporation. However, there are basic entries that should be included in the contract such as:
Qualifications to become a shareholder
Qualifications to become part of board of directors
Managing the internal affairs
Resolving internal disputes
Termination of partnership (what happens if a corporation goes bankrupt or when a shareholder dies, becomes disabled, resigns, retires, or has been terminated)
The conditions and process for buying the share of an ongoing partner
How much will be paid for the shares of a partner who is leaving
The percentage of ownership or shares of each shareholder
Apart from these basic entries, people should include other relevant clauses that will meet the specific needs of a certain corporation.
While every shareholder agreement may have slight differences depending on the corporation's needs, the contract should always be consensual and voluntary.
When crafting an agreement, it is important that each condition is fair and can be justified and that every clause should have reasonable terms and in line with the federal and state laws.
Another important thing which must be considered is the insurance policy that will be needed to buy the shares of a shareholder who is leaving the corporation. Without insurance, partners or business owners will have to use their personal cash.
For those who want to create a shareholder agreement by themselves (without hiring a lawyer), they can start by gathering samples of agreements from other businesses. They can review the clauses stipulated in the shareholder agreement to determine if this can be useful for them. Each state also has small business development center (SBDC) where people can access samples of business contracts.
After reviewing the samples, the second step is talking with the partners to come up with a consensual agreement.
When partners have decided on a certain arrangement, they can seek help from an SBDC consultant who will help them draft the agreement free of charge.
Usually, it is advisable to seek a corporate lawyer's advice when creating a shareholder agreement so the contract will not violate both the federal and state laws. Also, a lawyer can help partners to create reasonable terms and conditions and prevent legal loopholes in the contract.
Business owners can also seek advices from tax experts and accountants who know corporate tax duties and the proper handling of finances.
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