DECIDING ON THE GROUND RULES: 5 Reasons Why Your Business Needs a Shareholders Agreement

Whether entrepreneurs are starting a new business or running an existing business, it’s typical and logical for them to focus on business development, customers, marketing, financing and so forth. However, as the business grows and more stakeholders (including business partners and investors) get involved, one aspect of the business which entrepreneurs often neglect is the need to establish the responsibilities and expectations of each shareholder.

The best way to accomplish this objective is by adopting a shareholders agreement. A shareholders agreement is a contractual arrangement between two or more shareholders of a corporation. It is a common tool to set out the respective rights and obligations of shareholders, to confirm the rules that govern the management of the corporation, and to institute a process for resolving potential shareholder disputes.

There is no denying that entrepreneurs have many priorities when running a business – here are five reasons why adopting a shareholders agreement should be a priority.

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