Shareholder or Partnership Agreements – Why Do You Need One?

Owning a business with other people is not always plain sailing. During some of the more difficult moments, it is always useful to have a shareholders agreement governing how you all agree to run the business, or a partnership agreement if your company is not incorporated. If you and your fellow partners/shareholders have an agreement in place, then hopefully you do not have to refer to it very often. At Dickinson Parker Hill, we unfortunately see many instances when there are issues to be resolved between the owners of a business. It is often more much difficult to resolve the dispute without there being a written agreement in place to refer to which specifies how the owners will resolve their dispute.

The money then spent on litigation could have been avoided had the owners opted to instruct a Solicitor to prepare a shareholders/partnership agreement at a fraction of the price before the dispute occurred.

A shareholders or partnership agreement does not necessarily only need to be used in the event of a dispute. It may contain other useful provisions governing the day to day running of the company, any retirement clauses and even include restrictive covenants which prevent your fellow business owners from competing with your business or have other competing interests elsewhere.

When a business owner passes away, the family is often left to deal with the estate. A shareholders/ partnership agreement can account for what happens in this scenario. In the absence of a shareholders/partnership agreement, the family of the deceased business owner is left to try to resolve the ownership issues with the remaining business owners. This can be a costly and emotional affair for a grieving family, especially if an agreement is difficult to reach with the remaining business owner(s), which could be avoided by having a shareholders/ partnership agreement in place.

A shareholders or partnership agreement therefore not only assists the business owners in the day to day running of the business but it can also give the family of the business owner peace of mind that everything is in order for when the business owner passes away.

If you would like to discuss the features and the benefits of a shareholders or a partnership agreement in more detail, then please do not hesitate to contact George Mushahwar of Dickinson Parker Hill on 01695 574201 and he will happy to discuss further with you.