What should be in your shareholder agreement?

On Behalf of | Aug 7, 2022 | Business Transactions |

When shareholders have a financial stake in a Louisiana business, they are entitled to have a role in determining how the business should operate and making critical decisions. Shareholders must work in conjunction with the management and others who operate the company, which is why a clear and thoughtfully crafted shareholder agreement is critical. This outlines the rights and responsibilities of the shareholders and the company itself. 

A critical legal contract 

A shareholder agreement is a contract that outlines how a company will operate, as well as the rights and responsibilities of the shareholders. In addition to these details, a well-drafted agreement will also include details that pertain to the privileges and protections granted to shareholders. Details regarding the management of the company should also be included. The intent of these agreements is to ensure the protection of the shareholders’ rights and guarantee their fair treatment.  

Depending on the specific situation, it is possible that a shareholder agreement also includes information about safeguarding minority positions within the company. These agreements may outline the price of shares, legitimate pricing when selling shares, number of shares issued and more. These agreements are not the same thing as company bylaws. 

Preventing future issues 

Strong shareholder agreements can protect the rights of all parties involved. It will be helpful to seek the assistance of an experienced Louisiana business transaction attorney when creating this type of agreement or reviewing terms. When careful consideration is given to the terms of these agreements, the less likely it will be that issues arise in the future.