When two or more individuals come together to form a business partnership, for example a Limited Partnership or Limited Liability Partnership, it is advisable to have a correctly drafted Partnership Agreement carefully detailing the terms of the business relationship. It is highly recommended that the partners create a formal written agreement assisted by professional advisers to ensure that the partnership is created and managed correctly while avoiding conflicts between the partners.
A shareholders’ agreement is an agreement between the shareholders of a company which generally sets out the shareholders’ rights, privileges and obligations along with the foundation of how the corporation will be set up, managed and run. Having a shareholders’ agreement is a cost effective way of minimizing any issues which may arise later on by making it clear how certain matters will be dealt with and by providing a forum for dispute resolution should an issue arise down the road. Taking the time to sit down and discuss certain issues from the beginning can help eliminate disagreements between shareholders and ensure that everyone is on the same page.
In the absence of a written agreement, disputes will often result in costly legal proceedings and unnecessary financial loss for all parties. Come learn about these two agreements and what areas you need to cover when crafting them!