Shareholders Agreements and Cross Options
Any company that has more than one shareholder should regulate the arrangements between the shareholders in order to protect the business. Shareholder agreements and cross-option agreements are vital tools and can:
- Provide a clear blue print to all involved about how the business is to be run;
- Clarify the respective economic and voting rights for each shareholder;
- Set out what business decisions need unanimous consent;
- Establish a dividend policy (what profits should be paid out and what should be reinvested);
- Deal with what happens to shares should a shareholder leave the business for any reason (and protect the confidential information and competitive position of the business in such circumstances); and
- Put in place mechanics for dealing with shares if a shareholder passes away or becomes critically ill (often by allowing other shareholders to buy out their shares, usually with an insurance policy in place to provide funding).
We understand that all companies have different dynamics and objectives when it comes to their shareholding structures. We will work closely with you to understand the relationships and roles in your company and to prepare documents that meet your specific needs.
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