However, before start making business in Florida, the owners of a corporation need to tailor and draft a shareholders’ agreement to specify all the corporate details. In this article, you will find out the essential elements you should include in your shareholders’ agreement in Florida.
The Importance of Shareholders’ Agreement in Florida
A shareholders’ agreement is an agreement between the shareholders or members of a corporation. Basically, this document outlines the most fundamental aspects of a corporate business, such as:
- Corporate operations
- Corporate management
- Issuance and ownership of shares
- Shareholders’ rights and duties
- Shareholder protection
Also, there is a bundle of advantages associated with a well-drafted shareholders’ agreement. This document can help a company attracting investment without excessive effort, mitigating potential conflicts between shareholders, and protecting the rights of minority shareholders.
As it is plain to see, it is crucial to sit down and talk to an experienced business attorney to ensure an agreement is elaborated effectively.
What Should You Include In Your Shareholders’ Agreement in Florida? – An Overview
Buy-sell provisions stipulate how the shares of a shareholder may be reassigned in the event a partner leaves the business for whatever reason. It is essential for minority shareholders, as it defines the rights and duties of shareholders to either buy or sell their shares in situations involving a partner’s disability, death, insolvency, etc.
Dispute Resolution/ Breach of Contract/ Deadlock Provisions
All shareholders’ agreement must outline the consequences in case a shareholder incurs a breach of contract. Additionally, this clause must provide the forms of resolution of disputes between directors and/or shareholders.
Also, it is impossible to talk about a solid shareholders’ agreement without deadlock provisions, which are a manner of forcing a decision when strictly necessary.
Director Meetings and Other Business Formalities
One of the distinctive characteristics of corporations is their formalities. In this context, “formalities” refer to several precautions corporations must follow to ensure that the company remains legally distinct from its shareholders.
The shareholders’ agreement must include a clause overseeing directors meeting, detailing how meeting must be called, detailed procedures, etc.
Issuance and Transfer of Shares
It is fundamental to outline the procedures that shareholders must follow before issuing new shares or transferring new/existing shares.
Before someone becomes part of the company, it is important to execute a “deed of accession,” which is a written and formal agreement people/entities must sign before registering as shareholders in a company.
Ideally, a shareholders’ agreement should include clauses restricting transfers of shares in specific situations, especially smaller corporate businesses with fewer shareholders.
Shareholders Contribution to the Corporation
A shareholders’ agreement must state the way shareholders must contribute towards the corporation’s working capital. Also, it must outline the consequences for shareholders who do not contribute accordingly to their shareholding.
Regulative and Protective Clauses
When drafting a shareholders’ agreement, it is fundamental to include regulative clauses defining the corporate board of directors and management structure. Additionally, work with an expert business attorney to include protective clauses and prevent possible issues against the company.
Draft the Ideal Shareholders’ Agreement in Florida – Work with Jurado and Farshchian, P.L.
Shareholder agreements involve much more than you could expect to read in a single article, so it is crucial to work with an experienced business lawyer while elaborating a corporate agreement.