Shareholder Agreements / Partnership Agreements / Joint Venture
A Co-founder Agreement is a contract between Co-Founders setting out the ownership, initial investments and responsibilities of each Co-Founder.
Even if you are an established business entity, if you do not have one of the documents discussed below in place it is never too late to enter into one!
There is nothing more important than having a clear agreement between the founders (and owners) addressing key issues that are critical to your ability to safeguard the future of your new (or existing) business.
The key issues that any agreement must include are the roles and responsibilities of the founding team, equity ownership and vesting and IP ownership.
Shareholder Agreement (for Limited Company) – What it is, and why it’s important to have one?
A shareholders’ agreement is an agreement between all the shareholders of a company. It is a vital document to any shareholder relationship which allows shareholders to regulate their relationship with one another, the company itself and its directors.
It is important to ensure that a company’s structure is carefully considered so that management and shareholder roles are identified, clearly set out and observed to. Shareholders do not have any duties or obligations to a company or its business under law. If a company has 2 or more shareholders it is sensible, arguable essential, to enter into a shareholder agreement setting out the rules and regulations upon which the shareholders, the company and its directors are to be bound by.
Shareholders’ agreements ensure all parties will have a better understanding of their rights and obligations. The obligations will lay down how the parties must act or behave in their operation/management of the business and others will be restrictions on what they can, or cannot, do without appropriate approvals and consent from the other parties be it other shareholders or the board.
As with any business a company can go through many changes and ownership through its life cycle. It is not uncommon for shareholders to fail to agree on matters, resulting in ‘deadlock’, or a fall out completely between the owners. In such circumstances, the shareholders’ agreement will define the correct exit route for the circumstance so that the company and its business are not jeopardised.
You should enter into a Shareholders’ Agreement if…
- your business has two or more shareholders;
- you are setting up a new company or starting a new business;
- you are buying a business with others;
- you are acquiring shares in an existing trading company;
- you are selling shares or transferring shares to others in your company, whilst retaining a shareholding.
If you have already established your business, it is not too late to put the protections in place, and ensure that shareholders are protected in the future. You can enter into a shareholder agreement at any time not just when you set up a company!
Remember as with any agreement, terms or contract – review it regularly. A document that was a ‘good fit’ years ago, may not be good now - ensure that they remain suitable and relevant
Partnership Agreement (for Partnerships and Limited Liability Partnerships/LLP): What it is and why it’s important to have one?
A Partnership Agreement sets out the rights, responsibilities and obligations of the partners who have entered into business together. It is a formal agreement between the partners during the existence of the partnership and also upon its dissolution.
There is no legal requirement to have a formal or written partnership agreement. There are some compelling reasons for having a written partnership agreement, these include:
- A written agreement will ensure that the financial interests of partners are formally recorded.
- If you don't have a formal partnership agreement then the default provisions of The Partnership Act 1890 will apply which may not suit your agreed terms for example - all partners will be entitled to an equal share of the profits regardless of their input under the act.
- A partnership agreement will outline how to handle important events during the life of the partnership such as a member retiring.
What should be included in the partnership agreement?
- Partner details
- Partnership Business
- Decisions making
- Bank Accounts
- Profits and Losses
- Accounting Records
- Consequences of Death or Retirement
Joint Venture Agreement: What it is, and why it’s important to have one?
A Joint Venture is a cooperative enterprise, business agreement or partnership entered into by two or more business entities for the purpose of a specific project or other business activity. The reason for a joint venture is usually to perform a specific project.
The Joint Venture parties involve the sharing of resources, control, profits, and losses.
Joint ventures can be as informal as a handshake or formal legally binding written agreement.
Joint ventures are often entered into for a single purpose or project and are not intended to last forever, they will have a finite date. However in some circumstances they may also be formed for a continuing purpose.
Joint ventures are separate business entities, to each of the JV parties, with shared interest and goals. The parties agree how to share income and expenses.
Why form a Joint Venture?
- combine resources
- combine expertise
- reduce risk
- save money
The parties to the joint venture maintain their own separate identities for all purposes except those of the joint venture.
Walker Rose Solicitors provides astute legal advice and the drafting of legal agreements, polices and documents to address your immediate and on-going business needs.
We can assist, negotiate and draft agreement terms with the co-founders, investors, employees, suppliers and customers.
We can assist whether you are a new start-up or an established business. We work for you to design ‘best practice’ doctrines ensuring and securing a smooth running and efficient workplace.
Walker Rose Solicitors provide sensible commercial legal advice and draft the agreements you need in place to reduce areas of dispute or at least provide a mechanism for the parties to resolve a dispute. We can help you grow and evolve safe in the knowledge that you, your business and your brand are protected and stand on a strong legal ground to move forward.
Our advice is always precise, resilient and affordable.
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