The TK Advisor -TK Financial Group Ottawa Blog about Life Insurance, Critical Illness Insurance, Wealth Management and Estate Planning

Why Shareholder agreements do not work ?

The shareholder agreement is a very important document outlining certain provisions which will be followed upon by shareholders in good and very bad times . The best shareholder agreement is one that stays in the safe and does not need to be executed and the worst one is one that is not well designed which causes people great stress . All lawyers do not know how to PROPERLY structure a shareholders agreement and you will find out only when wheels are falling off your truck . Things to think about : non compete , employment contract outside the agreement , power of attorney in case of incapacity in your will , understanding all provisions ,take care of exit strategies [ death , disability , retirement ] , valuation methodology , voting rights . When some adviser tells you they will give you a standard agreement run do not walk out of their office . Get competent advice from professional advisers that also understand realities of being a business owner .

Shareholder Agreement can be a blessing or a curse !

I urge you to work with Legal Advisers who specialize in drafting agreements rather then specialists . Why ? In my opinion it is better to draw up a very good agreement while shareholders are getting along rather then learn that you are being abused at the time of dispute . Make sure your chosen lawyer is taking time to explain to you what if scenarios at the onset and everyone understands the provisions as well as their responsibilities as a shareholder . Being a shareholder of a company carries fiduciary responsibilities and they can not be breached . If you do not have a agreement , call me and I can assist you in finding lawyers that are thorough at creating agreements .