Many business owners do not have the basic legal formalities in place to protect themselves and their businesses. Lynn Hobbs and myself have recently joined forces as consultants of Excello Law to offer unique legal services to Shropshire businesses.
After setting up our own businesses we were surprised to learn that many other people do not put proper agreements in place with their business partners, which can lead to major problems down the line. In order to assist businesses we have created a free information leaflet to provide businesses with the correct advice.
Businesses need to have a number of basic agreements set in place.
These include a business plan to make sure owners are in agreement on the way forward, partnership agreement and terms of business for customers and suppliers and, for limited companies, shareholder agreements, director’s employment contracts, director’s liability and keyman insurance for business owners.
All business owners should have a shareholders agreement in place, regardless of how confident they are that their business will be successful and that they will not fall out. It also acts as a discussion point for us to prompt the business owners to agree anything they have not previously discussed. This discussion may include a number of topics, such as what happens if a shareholder wants to leave the business; this in particular can often be a point of dispute, especially if the way of calculating the value has not been previously agreed. People therefore need to consider the transfer of their shares and the value of the shareholder’s interests in the business.
Other topics to consider include what the nature of the business shall be, which can be as flexible or restricting as shareholders want, the level of expense or liability, which each shareholder can incur on the business’ behalf without the consent of other shareholders and what changes can be made to the business without the written consent of the other shareholders – such as taking out loans and entering into contracts which are not usual to the business.
People do not always know what should be agreed upon before setting up a business with a partner; they should also consider what happens when a shareholder is made to leave the business due to bankruptcy or breach of agreement as well as whether a shareholder must also resign as a director on selling their shares. These are all vital topics to explore in advance but many businesses fail to look into it properly before it’s too late.
A free information leaflet on shareholders agreements is now available, and people can call or email to receive one. To discuss the services they offer or to receive a free leaflet, contact Lynn on 07807259868 or e-mail email@example.com