Shareholder Agreement Guidance in the Conejo Valley
Corporations are subject to a high level of regulatory scrutiny. Corporate businessowners must file articles of incorporation with the state, establish bylaws, keep corporate minutes, maintain other detailed records, and comply with a variety of other formalities and regulations. A shareholder agreement is another critical document that defines the roles of shareholders, their responsibilities to each other, and their responsibilities to the corporation.
At the Law Offices of Kent W. Keating, we assist our corporate clients with a wide variety of transactions and contracts, including shareholder agreements, buy-sell agreements, and formation documents. Our Thousand Oaks shareholder agreement lawyer has over 35 years of experience and can help you draft a comprehensive contract that reflects your company's needs and objectives. We are well-versed in how the language of a shareholder agreement can impact succession planning and will strategically structure your plan to protect your business in the event of a major shareholder's divorce, bankruptcy, incapacitation, or death.
How to Approach Your Shareholder Agreement in California
Whenever a corporation involves more than one party, it is a good idea to consider drafting and executing a shareholder agreement. Though the articles of incorporation will specify the company's policies, goals, and rules, a shareholder agreement offers enhanced protection and can help the business survive a disruptive life event.
Our Thousand Oaks shareholder agreement attorney can help you develop a strong contract, which should generally include:
- Who the Agreement Covers and Their Rights. The agreement should explicitly specify who the document covers and what rights the contract grants.
- Details on Corporate Procedures and Operations.The contract should clarify how directors will be appointed and removed, how board meetings will be run, how decisions will be made, and how the business's finances will be managed.
- A Right of First Refusal Clause. A “ROFR” clause gives other owners a fair chance to purchase shares another owner was planning to sell.
- Dispute Resolution Mechanisms. Conflicts are inevitable, especially when shareholders do not agree on the direction of the corporation. Your contract should include sound instructions for how disputes will be settled.
- How Shares Will Be Handled. This is one of the most important elements of any shareholder agreement. The contract must detail how shares will be fairly priced, purchased, sold, and transferred. These provisions should include details on how both optional and mandatory stock buybacks will work. It should also address what will happen if a major shareholder passes away, becomes incapacitated, gets divorced (and their shares are subject to property division), or files for bankruptcy. Failing to sufficiently address these scenarios can lead to significant problems.
The shareholder agreement is a crucial foundational document that must be taken extremely seriously. Your shareholder agreement should serve as a roadmap for your growing business as well as a source of peace of mind should a complication or dispute arise. Our team at the Law Offices of Kent W. Keating will work closely with you and other shareholders to ensure your agreement satisfactorily covers all applicable areas and protects the corporation from numerous contingencies.