It’s easy for business owners to assume everyone will stay on the same page when starting a business. The shareholders and board of directors may initially agree on management policies and financial practices. However, conflicts can arise quickly. Creating an effective shareholder agreement can help your corporation continue to operate smoothly.
Relying on a comprehensive, legally enforceable shareholder agreement will help you determine how disputes should be handled. The attorneys at Jones, Gregg, Creehan & Gerace LLP can help you negotiate and draft a comprehensive shareholder agreement that addresses all the important aspects of running your business. The agreement should include an agreed-upon way of resolving conflicts that may arise.
Protecting Corporations with Effective Shareholder Agreements in Pittsburgh
Jones, Gregg, Creehan & Gerace LLP Is a full-service law firm representing Pennsylvania companies in a wide range of matters. In addition to helping you create a shareholder agreement, we can provide you with skilled legal counsel as your company grows and changes. We will ensure that our draft shareholder agreement has the shareholders’ and company’s best interests in mind. As conflict arises, your shareholder agreement can help you avoid expensive legal battles in the future.
Litigation can drain your business’s time and money and lead to public relations problems. Creating a thorough shareholder agreement is an important way to decrease the likelihood of contentious shareholder disputes.
The attorneys at Jones, Gregg, Creehan & Gerace LLP are well-versed in Pennsylvania business laws. We will work with you to create a contract that helps protect your company’s interest and clearly states the rights and responsibilities of the shareholders. Whether you’re a shareholder or a small business owner, seeking the counsel of an experienced attorney can help you create articles of incorporation, bylaws, non-disclosure agreements, partnership agreements, and other legal documents that will help your business start off successfully.
If you aren’t sure where to start, Jones, Gregg, Creehan & Gerace LLP can help you identify which documents you need and begin working on completing them. We focus on protecting our clients’ businesses by providing them with cost-efficient legal services.
The Benefits of Working with an Attorney to Create a Shareholder Agreement
If you decide to start a company and choose a corporation for your business entity, you must create corporate bylaws. However, these bylaws will not address important issues that could arise if your company has two or more shareholders.
Working with an experienced business attorney can help you create a shareholder agreement and other important documents to protect your shareholders’ and company’s rights under Pennsylvania law. The corporate attorneys at Jones, Gregg, Creehan & Gerace LLP have an in-depth understanding of Pennsylvania’s business laws and can help you draft a shareholder agreement that meets all relevant legal requirements.
What Should a Shareholder Agreement Address?
A shareholder agreement should outline the protections and privileges of shareholders and clearly state how the company should be managed. Many shareholder agreements restrict a shareholder’s ability to transfer his or her shares to third parties outside the company. It’s also wise to include the number of shares issued, the fair pricing of company shares, and each shareholder’s percentage of company ownership.
Shareholder agreement should also include preemptive rights for existing shareholders to purchase shares that become available. Should the company be sold in the future, the shareholder agreement should address specifics on how payment should be made. Comprehensive shareholder agreement should also address the following:
- Members of the board of directors
- Majority or supermajority voting requirements for specific types of decisions
- The corporation’s officers
- By or sell obligations or rights of first refusal
- Shareholder and employees’ employment agreements
- Matters regarding the termination and dissolution of the corporation
- Provisions for bonuses
- Termination of a shareholder’s employment
- Shareholders’ life insurance provisions
- The dispute resolution process
Shareholder Agreements and Business Succession Planning
Additionally, the shareholder agreement should state what will happen to the company shares if a shareholder retires, decides to leave the company, or passes away. Creating a shareholder agreement is an important aspect of small business succession planning. With a clear plan, you can ensure a smooth and fair transition when a shareholder retires, becomes disabled, or passes away. Without a clear plan, disputes may arise that lead to litigation, hurting the company and the shareholders.
Protecting Our Client’s Rights in Court
Shareholder disputes can be challenging and complex to navigate. Shareholder disputes can arise from multiple situations and vary depending on the industry, the type of company, and the nature of the disagreement. Shareholders disagree with the terms of the shareholder agreement, such as the obligation and rights of each shareholder, how disputes should be resolved, and how profits and losses should be distributed. In other cases, shareholders may disagree on how the company should be managed, such as the appointment of key executives, the company’s strategic direction, or the composition of the board of directors.
Working with a shareholder dispute attorney can be important in avoiding and resolving shareholder disputes. An attorney can help you draft a shareholder agreement that clearly defines the responsibilities and rights of each shareholder. Doing so can prevent disputes from arising. An attorney can help you ensure that your agreement establishes a workable framework for decision-making, profit sharing, and dispute resolution.
They can also ensure that your company follows corporate governance practices and complies with applicable laws and regulations. Jones, Gregg, Creehan & Gerace LLP provides Pennsylvania businesses with legal counseling assistance in shareholder disputes, corporate governance matters, and litigation.
Contact a Shareholder Agreement Attorney in Pittsburgh
The attorneys at Jones, Gregg, Creehan & Gerace LLP are here to help make starting your business a smooth process. We can help you decide which type of legal entity will work best for you and file all of the required documentation to help your business start off right. We can help you draft a shareholder agreement to protect the rights of shareholders and your company. Contact Jones, Gregg, Creehan & Gerace LLP to learn more about our comprehensive commercial legal services.