Thursday, 10 December 2009

Shareholders Agreements & Involving Family

One of the questions I always ask when introduced to a new client is "Are any family involved with the business"? My heart always sinks when they nod and whilst it's by no means a problem to everyone, it is not something I would encourage and in fact would positively discourage. It' can cause major family rifts and is just not worth it.

This brings me on to shareholders agreements. Obviously you should get a lawyer to do this but they are very important and set the rules of the game, before you play it, which is much better than making the rules up as you go along! Most small businesses do not have agreements in place and many lawyers have made tidy sums sorting out the mess that this can cause. So in summary, if you are setting up a new limited company, get the shareholders agreement incorporated into the memorandum & articles  from the outset. This is just as important when family are involved and possibly even more important. Also, as the mem's and art's for a small business are usually rather generic, you can get these tidied up as well. Not the most riveting read, but essential to your future well being I can assure you.