Why do I need a Shareholder or Unit Holder Agreement? – Structuring, Protections and Exits
By Felicity Simpson
14 June 2016
The importance of an agreement that governs the relationship of the owners of a business is often not appreciated until it is too late. The most fundamental example which illustrates this point is when joint business owners discover there is no satisfactory solution to their dispute with their co-owner, and litigation becomes the only remaining option.
In such circumstances, it is integral to consider the following factors to assist in achieving a resolution:
How to address repayment of disproportionate contributions of one party?
How to address the right and ownership if the parties fall out and can no longer work together;
The ultimate goal of your business – sale to a third party, provision of income for family, longevity, etc. and how best to meet these goals.
Decision Making – by who? Who holds the balance of control? What occurs if there is a deadlock?
Key Person Insurance and how the death or total and permanent disability of a key person may impact the business, the key person’s value in the business and their families’ interest.
First and/or Last Rights of refusal for the interest holders to buy out their co-owner.
The introduction of new interest holders to the Business.
Intellectual Property Protection and ownership.
Tisher Liner FC Law possesses a wealth of experience in dealing with such matters, including: management of the sale and purchase of businesses, the structure (or restructure) of businesses, dismantling of businesses where the owners have reached a deadlock, and the sale or purchase by one owner of another owner’s interest.
We will work with your accountant to achieve a balance of the financial and legal considerations that meet the needs and expectations of the parties involved. If you do not have an accountant experienced in the area, TLFC Law can recommend accountants with whom we have well established working relationships.