22 Apr, 2024
A Shareholder Agreement is an essential legal document for any business owned by more than one person (not being their relationship partner) It’s a legally binding agreement between shareholders or business partners to establish a framework of how the company should be operated and outlines the rights, obligations and roles of the shareholders when (not if) one of the eventualities occur. What is in a Shareholder Agreement NZ? Shareholder Agreements include, but are not limited to covering off: One of you are: Dying Suffering total permanent disability Suffering trauma Waiting to retire You started fighting and neither want to leave If leaving how a fair price for your interest is fixed What happens if the others refuse to buy you out What happens if you are leaving and have money tied up in the business Controls around hiring/firing, borrowing, extending credit and changing business directors etc Why do you need a Shareholders Agreement in New Zealand? Consider a Shareholders Agreement as the bedrock of a business structure ; without it, the business’ foundation becomes precarious. It ensures shareholders are treated fairly and their rights are protected, whether from internal conflicts to ambiguity regarding share valuation and shareholder roles. Essentially, it serves as a proactive measure to avoid potential crises and gives structured processes to stop disagreements escalating and avoid complications.