AYN Advice

What is a shareholder’s agreement?

A Shareholders Agreement s a fundamental written agreement between the respective shareholders and it sets the ground rules for the relationship between them and with the corporation. Is it a must to have a shareholders agreement? Having a shareholders agreement is not obligatory, but advisable because failure to have one may cause the shareholders considerable concerns over a variety of matters in relation to the operation of the business and of their respective investment in the business. The expense of a shareholders agreement may not contribute to the success or prosperity of a business, but it should definitely be regarded as a long-term investment in the event of disagreements or death of one of the shareholders. You may be thinking that there will never be a material disagreement between yourselves and that you will probably never use this document. The analogy here can be made to people getting married and considering whether they should invest in a marriage contract!

Your partner in business is your wife and you feel ridiculous to have shareholders agreement between the two of you. Shareholders Agreements need to be considered by everyone in business with a partner, regardless of your relationship to that person.