What information should be included in a shareholders’ agreement?

On Behalf of | Sep 10, 2021 | Business Transactions |

Becoming a shareholder of a Louisiana-based company may come with many rewards but also numerous risks. One way shareholders can protect themselves is by ensuring the shareholders’ agreement contains the right information. What information should be included in this contract?

The benefits of being a shareholder

There are numerous benefits to being a shareholder. These individuals share in a company’s success but also accept losses as they come. They have the right to voice their opinion on how the company is run but don’t necessarily have to be involved in day-to-day operations. They are not personally liable for the company’s debts and cannot be held accountable if the business becomes insolvent.

Key items in shareholder agreements

A shareholders’ agreement is usually very detailed. This legal document intends to protect shareholders and ensure they are treated fairly. The following items are typically included in these documents:

  • Date
  • Number of shares
  • Preemptive rights
  • Capitalization table
  • Payment details
  • Obligations

While having a shareholders’ agreement is not necessarily required, it is still wise to have it in place. It is proof of agreed-upon terms, so if any party breaches the contract, the offended party has a leg to stand on if they opt to pursue damages through legal means. An experienced business law attorney can help create shareholders’ agreements that fit one’s needs and offer all the proper and desired protections. Legal counsel may also be able to assist those who are victims of contract breach in seeking compensation for their losses by filing claims in a Louisiana civil court.