You don’t need a shareholders agreement if, when considering the other shareholders in your company, you can guarantee and control that they will not:
die or become incapacitated allowing their estate (including their shares) to be gifted to a third party or be subject to a claim;
develop or suffer a long term illness either physical or mental;
divorce or become entangled in a matrimonial property settlement with their spouse;
become bankrupt;
develop an addiction ranging from substance abuse to gambling;
break the law leading to incarceration;
refuse to come to a deal with you when it is time for you to go your separate ways; or
have a dispute with you about whether they are owed money by the company.
Although you may have a degree of trust with your business partner, and we appreciate you couldn’t operate without this trust, the reality is trust is not enforceable and so it falls to you to safeguard your shareholdings and the success of the company from these human variables and the costly disputes that follow them.
Consider that these “disputes” often will not be with your shareholding partner rather with their families and relatives, or a worse still a trustee of a bankrupt estate.
Obtaining a shareholders agreement now (while things are good) will give you a legally enforceable document that provides transparency and certainty in relation to the rights and responsibilities of the company, its shareholders and directors. This provides a mechanism reducing the risk of disputes whilst providing a document to direct how those disputes are handled should they arise.
If you would like to know more about shareholders agreements please don’t hesitate to contact Creevey Horrell Lawyers to make an appointment or a simple telephone consult with one of our commercial lawyers.