What is the purpose of a shareholders’ agreement?

When setting up a business with family or companions it is anything but difficult to expect that nothing can turn out badly later on. You may expect that as you trust each other you don't have to set up something like a shareholders agreement, however this is not a fact, you may believe that requesting a shareholders' understanding will make it seem like you don't trust or regard your new business accomplices.

Purpose of shareholder’s agreement

You might need the document for these purposes:

  • Running a company is not easy. There are times when conflicts occur between partners and both are instating for their decision, at this time shareholder’s agreement ensures proper functioning of the business.

  • Professional negligence may result in claims from the customers or clients and this issue can be dealt efficiently through using this formal document.

  • It can prevents and reduces chances of cheat as all the terms of business are listed in written form and sign over by both parties.

  • A single partner may ask for more shares, however all such complications can be avoided through using this document. Clear percentage is written down in this document.

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