
Why do you need a Shareholder Agreement?
Standard company constitutions usually have very generic provisions dealing with administrative issues such as issuing shares, procedures for calling and holding board meetings and shareholder meetings, and so forth.
However, there are many critical business issues that they do not deal with but which are often much more important to the owners of the business, such as:
- Protection of Intellectual Property, Trade Secrets and Confidential Information;
- Entry and exit of parties to and from the business and related issues;
- Protection of Goodwill from competition by outgoing parties;
- Special Conditions that may be relevant to the particular type of business.
You cannot simply rely on a gentlemen’s “hand shake” agreement to cover all (or any) of these important issues!!!
We have often seen promising businesses crippled by the departure of a key person shareholder who in the absence of any written obligations took with them a list of “their” clients and promptly set up a new business in the same geographical area as and in direct competition with the existing business (in one case even using an identical business name!) with disastrous results for the continuing business owners.
A WillWorks® Shareholder Agreement can clearly address all these issues and more.
For more information about how a WillWorks® Shareholder Agreement can benefit you, please contact us to discuss your needs.
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