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Shareholders’ Agreements in Jacksonville & Throughout Florida

Prevent and Anticipate Disputes with Our Experienced Jacksonville Business Attorney

Issues and disputes between business partners arise all the time. In most scenarios, two people who never anticipated being in a confrontation suddenly find themselves navigating a serious disagreement. But what can be done if neither business partner is willing to compromise? In this scenario, a carefully drafted Shareholders’ Agreement can help all parties resolve an impasse.

A company can have multiple shareholders with unique visions of how a company should operate. Fortunately, a Shareholders’ Agreement can prevent one business partner from implementing their ideas in a way that harms the company as well as the ongoing working relationship between the collective shareholders. The Jacksonville business lawyer at Law Offices of Kate Mesic, P.A. has drafted numerous Shareholders’ Agreements for a variety of businesses. If you require legal representation or guidance, contact our firm today.

Contact Law Offices of Kate Mesic, P.A. at (904) 615-8950 to start the drafting process today.

What Is a Shareholders’ Agreement?

A Shareholders’ Agreement is essentially a contract that outlines how a company should be operated. This document can address several important issues, including a shareholder’s obligations, conflict of interest rules, how to transfer shares and rights, and dispute resolution methods regarding the management of the business and its finances, capital, assets, and shares.

When there is a dispute between two more business partners, a carefully drafted Shareholders’ Agreement can provide for valuation of the company and manage issues regarding sales, transfers, and other dispute resolution deadlocks.

I’m Ready to Draft an Agreement. What Factors Do I Need to Consider?

Attorney Mesic needs to ask her clients several questions in order to draft a comprehensive Shareholders’ Agreement. Please review the following questions to understand why a Shareholders’ Agreement is essential for the survival of your business.

The Business

  • What is your business?
  • What vision do you have for your business’ future?
  • Do your fellow shareholders share this vision?
  • Will the shareholders ultimately sell the business?
  • Do the shareholders plan to pass the business on to their family members?

The Shareholders

  • What are the full names of the shareholders (including corporate names)?
  • What is the number/class of shares that each shareholder can hold?
  • What amount needs to be paid for their shares?
  • Are all shares fully paid for?

The Directors

Please note that there must be at least one director. The directors are elected by the shareholders and direct the affairs of the business. They can also hire, appoint, fire, and replace officers of the company.

  • How many directors does the business have?
  • How should directors be selected?
  • What are their full names and home addresses?

The Officers

Officers manage the day-to-day business of the company. There must be at least a President and a Secretary (who can be the same person).

  • How many? What titles?
  • How should officers be selected?
  • Who are they? Especially, the President and the Secretary?
  • What are their full names and home addresses?

General Decision-Making Questions: Strategic & Operational

  • Who is responsible for making decisions regarding the everyday operation of the business?
  • How should voting rights be handled?
  • What number constitutes a quorum of decision makers?
  • Is the general rule simple majority vote, or something else?
  • Are there issues you all must agree on (i.e. requires unanimous approval)?
    • How should a deadlock be avoided, especially for 50/50 businesses?
    • Can shareholders commit to mediation or arbitration?
    • Can a third party break the deadlock?

Distributing Profits

  • Who decides when to distribute profits to shareholders and how much will be distributed?
  • Are profits distributed based on shares only, or by something else?

Voluntary Withdrawal

  • Can a shareholder withdraw from the business if he or she wants out?
  • If yes, how? If no, what do you do with such a shareholder? Consider the following:
    • Are they relocating?
    • Is a deal not going the way they intended?
    • Do they simply want to cash in?
  • Are the other shareholders forced to buy their shares?
  • Sale of whole business with any shareholder entitled to match good faith third party offer?
  • Winding up of company?
  • Can a shareholder sell to a third party, and, if so, do others have a right of first refusal?
  • How should the shares be valued?
  • How will the purchase price be determined?
  • What are the payment terms?

Involuntary Withdrawal

  • What if the other shareholders want to force a shareholder out?
  • Are the other shareholders forced to buy their shares?
  • Winding up of company?
  • How should the shares be valued?
  • How will the purchase price be determined?
  • What are the payment terms?

Disability of a Shareholder

  • What if a shareholder becomes sick or disabled for an extended period of time?
  • How long can that continue before we must question whether they can stay involved in the company?
  • How will we deal with that? Their salary? Profit share? Shareholdings?

Death of a Shareholder

  • Do they have to be bought out?
  • Do the other shareholders buy them out, or does the company buy them out?
  • How are shares valued?
  • How is purchase price calculated?
  • What are the payment terms?
  • Do we minimize the tax consequences for the deceased shareholder’s estate?

Use of Insurance

  • Do we fund this with insurance?
  • Who owns the insurance?
  • Who owns the premium?

Are You Ready to Draft a Shareholders’ Agreement?

Contact the Jacksonville business lawyer at Law Offices of Kate Mesic, P.A. if you and your partners are ready to draft or amend a Shareholders’ Agreement. Our experienced attorney can thoroughly explain your legal rights and obligations and draft a contract that reflects the best interests of your business. With our guidance, you can avoid costly disputes that may impact the ongoing success of the company.

Contact Law Offices of Kate Mesic, P.A.at (904) 615-8950 to arrange a consultation today.

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