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shareholders agreement example

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									ABOUT US
Buckmaster Hawkey are specialists in the preparation and grooming of private businesses for sale or succession. As a part of this process, we prepare shareholders‟ and partnership agreements for our clients that address all the issues covered in this brochure, ensuring that management, operational and ownership problems are kept to a minimum. Shareholders‟ agreements are part of the foundation stages of exit strategy planning, whose overall objective is to achieve the maximum satisfaction for you (in both financial and personal terms) when you exit your business. We recommend that every business, which has co-owners, should have a properly drawn up SHA in place. Our directors and principals have extensive experience in the field of exit strategy. We work with your advisers, such as accountants and IFAs, to ensure that you are provided with comprehensive, cost-effective and skilled advice in this most crucial phase of your business life. To examine your needs for a shareholders‟ agreement, or to review your exit strategy planning requirements, contact us for an initial free and confidential consultation.

CONTACT US DO I NEED A SHAREHOLDERS’ AGREEMENT? A GUIDE FOR THE BUSINESS OWNER

John Hawkey Director Buckmaster Hawkey Limited Glenside, Riverside Taunton Somerset TA1 1XG England

www.exitstrategyplanning.com
Telephone 01823 337471 Mobile 07751 879927 (E) johnhawkey@btinternet.com

For information about our Corporate Services work please go to: www.buckmasterhawkey.com

Exit Strategy Planning
“Grooming your business for sale or succession”

DO YOU HAVE A PARTNER OR FELLOW SHAREHOLDER?
If you are in business with a partner or fellow shareholder, it is vital that you have a partnership or shareholders‟ agreement („SHA‟) in place to regulate the operating relationships between yourselves and to lay down clearly how the transfer of shares will be dealt with.

providing guidance on disputes between partners, shareholders, or directors. The legislation is silent on most of the important practical issues and disputes that arise between business co-owners. “I don’t need a SHA because my fellow directors think exactly like me – we have been close friends for years” This might be so, but ask yourself the following questions:  “If my fellow shareholder or partner dies tomorrow, who will inherit his shares or interests?” “What will my new fellow shareholder (or partner) want to do about the running and disposal of the company?” “How will this effect my exit strategy planning?”

A PROPERLY DRAW UP SHA
To provide operational and ownership certainty and to pave the way to a successful exit, a properly drawn up SHA should include the following provisions as a minimum:  Agreement on the rights and levels of responsibility between shareholders and directors (or partners) Pre-emptive rights of remaining parties to purchase the shares or interests of co-owners who choose to depart Rights of remaining shareholders to purchase shares of co-owners or directors who suffer circumstances such as death, disability, dismissal or bankruptcy Adequate funding to enable these rights to be exercised by the remaining shareholders or partners Restraint of trade (or competition) clauses Operational confidentiality Treatment of key persons and funding for their loss

MISCONCEPTIONS ABOUT SHAs
“What about our M & A: doesn’t it cover these issues?” It is a common misconception amongst business owners that their Memorandum and Articles of Association adequately cover issues such as share transfer on death and relationships and problems between directors. With most M & As this is simply not the case! “Well, if its not covered by my M & A, surely it’s dealt with in the Companies or Partnership Acts?” Again, this is a common misconception. Corporate and partnership legislation provides little or no assistance in the important areas of pre-emptive rights or compulsory share transfers, or in

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Are you absolutely sure of the answers and are you comforted by them? There are other questions you could also ask yourself about the situation in your business. For example: “What are the agreed arrangements in my business for the transfer of shares in the case of disability of a shareholder (or partner)?” and “Is there funding in place to ensure that I can pay for the shares when this happens?”

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