Create Governing Documents with Priori
A shareholder agreement establishes the rights and responsibilities of all shareholders, who own a share of stock in a public or private corporation and describes how the company should be operated. If your company has multiple shareholders, it is recommended you implement a shareholders agreement. A Priori lawyer can help your company draft a shareholders agreement, so your business can run more smoothly.
Some typical issues covered in a shareholder agreement can include:
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Who can serve on the Board of Directors and as an officer, as well as procedures for each.
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What happens to a shareholder’s equity after death, disability or bankruptcy. This is known as a “buy-sell” provision.
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How a shareholder’s stock can be transferred or sold, including any restrictions on transfer. This might include “right of first refusal,” “drag-along” or “tag-along” provisions.
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How additional shares can be issued.
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What corporate activities are subject to shareholder approval, and what percentage of shareholders must approve. Some activities may require a mere majority, while others a supermajority or even unanimity. These provisions may be of particular concern to minority shareholders.
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Valuation of shares.
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How and when dividends are distributed.
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How the company will be managed.
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Non-competition obligations.
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Dispute resolution.
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Information rights of shareholders.
- Preemptive rights (aka pre-emptive rights), which, in the event the company offers additional shares, gives curent shareholders the right to purchase those shares before the shares are offered to others.
These are simply some of the many issues a shareholder agreement can address -- and each of these provisions can be structured in myriad ways, depending on your current needs and future plans. A lawyer can walk you through the significance and consequence of each of these decisions and craft a shareholder agreement tailored to your business.
Pricing
Depending on the number of shareholders and your future plans for investment and growth, the cost of having a shareholder agreement drafted can run a broad range. Through the Priori network, bylaws can typically cost anywhere from $350-$5000. In order to get a better sense of cost for your particular situation, put in a request to schedule a complimentary consultation and free price quote from one of our lawyers.
FAQ
What is the difference between bylaws and a shareholder agreement?
The bedrock corporate governance documents for a corporation include bylaws and a shareholder agreement. These agreements are supplementary, not exclusive. Bylaws set forth the corporation’s purpose and the rights and responsibilities amongst owners and managers. Bylaws are required for corporations in 35 states. A shareholder agreement establishes the rights and responsibilities of shareholders amongst themselves. While no states require a shareholder agreement, many lawyers consider it prudent for corporations with more than one shareholder. A corporate lawyer can advise on what corporate governance documents you need to draft.