Shareholders & directors advice

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    We can help you structure your business providing the right kind of share offering to individuals whether they be founders, silent partners, equity providers and importantly family members so as to ensure the right level of control and say in the business is set. This will ensure you maintain control of your business from the outset.

    Shareholder & Director Agreements

    In providing this advice we can draft for you Shareholders Agreements and Directors Agreements specifically setting out the intentions of the business so as to avoid disputes in the future. Often most disputes begin when the company starts to become successful with a regular income and to the shock of the founders and others around them it starts to succeed! We often wonder why that shock is there, with all the hard work people put into their new companies it is inevitable it will succeed. Success should be measured by your individual requirements from the business and not the money it turns over each year.

    Disputes arise over what was apparently agreed in those late night conversations, or early morning coffee meetings, where nothing was ever recorded on paper and signed. Often it is “well you said we were 50/50” and the other believes it was a 70/30 share for example. Other disputes arise when one person is putting in more effort and others seem to not be contributing however want the same share of the income for example. In the beginning everyone is excited to get going and often overlook what can happen in the future. Having the correct documentation from the outset ensures every individual is aware of what it is they can expect from the business.

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    Directors Agreements

    Directors are appointed to office by shareholders to run their business as they say for their benefit. As businesses grow and the number of shareholders increase, normally from the shareholders themselves to others around them who have helped grow the business, the appointment of numerous Directors becomes essential to run the business. Often each Director has a different role and part to play in the company. Directors are not employees of the company, but office holders, they can be shareholders or salaried Directors.

    It is therefore vitally important that your business has Directors Agreements. Much like employment contracts, they provide the Shareholders governing powers over what the Directors roles are and what they can and can’t do. They feed the control of the business back to shareholders and allow important decisions to be deferred where necessary to protect the Shareholders positions.

    Being able to promote from within the business to Director often spurs on employees and gives them the ambition to do well in the business. Once they achieve this position it is important to ensure their control over the business does not exceed that intended by the shareholders. A Directors Agreement does just this. It provides details expectations, targets, and financial compensation for their hard work. If their appointment goes wrong in any way it is of course just as important for Shareholders to be able to terminate the appointment and replace the Director as they see fit. This does not always mean the Director leaving the company, simply that they no longer have the control they would have been as Director and could for example become an employee instead.

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