Legal agreement to cut out risks ANNA HAY (PICTURED), SOLICITOR AT EATON SMITH, SAYS YOUR COMPANY MAY WELL NEED A SHAREHOLDERS’ AGREEMENT
Richard Paxman (left), chief executive of Paxman Coolers, receives his ExportExchange “patrons” certificate from Philip Kelly, of the Department for International Trade in Yorkshire MANY business owners are busy running successful companies often with close family or friends and with no problems arising.
So why do we recommend you have a shareholders’ agreement?
A shareholders’ agreement can set out provisions governing the management of the company and can include matters on which shareholders’ approval is needed. A shareholders’ agreement can include detailed provisions tailored to the company dictating what should happen as and when a shareholder wants to or is required to sell their shares.
A shareholders’ agreement can be used to regulate what would happen to employee shareholders’ shares should they leave for whatever reason.
While many companies run smoothly for years with no fall outs between shareholders, this is not always the case.
It is therefore sensible to formalise in the agreement, from the outset, the approach that will be taken if the relationship does turn sour, so if disputes do occur, there can be specific provision laid down, such as mediation and arbitration for dealing with them.
A shareholders’ agreement can include a dividend policy to which the company should comply.
And restrictions to prevent an exiting shareholder from setting up or working with a competing business can be included in a shareholders’ agreement.
A shareholders’ agreement is a private document so its content can be kept confidential, unlike the content of the company’s articles of association.
An interested third party, such as a bank, may require sight of a shareholders’ agreement as evidence that the company is stable and well run.
The above points outline some key reasons for why a company should put in place a shareholders’ agreement, but there is no such thing as a “standard” shareholders’ agreement.
We can provide a bespoke agreement drafted to reflect the specific requirements of each company. BUSINESSES in Huddersfield are invited to sign up to a new export initiative.
ExportExchange aims to promote overseas trade among companies in the Leeds City Region, which covers Kirklees.
The service offers free advice to firms new to selling overseas from companies that are already successful exporters.
More than 50 experienced Yorkshire export businesses have already signed up to become official “patrons” of the scheme. They include global exporter Paxman Coolers, based at Fenay Bridge, which produces scalp cooling devices to combat hair loss in cancer patients undergoing chemotherapy.
Victoria Boldison, ExportExchange network manager, said: “There are lots of sources of information out there on selling overseas, but the difference with ExportExchange is that fledgling exporters can tap into genuine practical advice from people like Paxman Coolers chief executive Richard Paxman, who have already built up years of experience in overseas markets to become successful exporters.
“Businesses signing up to the programme can choose the patron with the experience relevant to their own industry and target overseas markets. That’s the kind of invaluable help money really can’t buy.”
She said: “The programme seems to have really struck a chord with businesses in Huddersfield and right across the region and we have had large numbers of companies signing up online since we launched at the end of June. I would urge any businesses interested in selling overseas go to the ExportExchange. co.uk website and register for the free advice and support on offer.”
The programme is backed by the European Regional Development Fund and the Leeds City Region Enterprise Partnership.