The answer is: “Any private company with more than one shareholder”.
Suppose you are a minority shareholder in a company and the company is being run in a way that does not take account of your interests.
Or suppose you and another person are equal shareholders in a company but the other shareholder is not contributing as much as you are.
What do you do?
You refer to the Shareholders Agreement of course. But wait – you haven’t got one. That was something you always intended to deal with but you never got around to it. You wouldn’t get into a car you knew had faulty steering and no brakes. Investing in a private company without a well-drafted shareholders’ agreement is like getting into an unroadworthy car. You may reach your destination of financial success. But you are taking a real risk. You may end up having a very unpleasant and costly experience. We often are consulted after the event by a shareholder in a private company seeking help to resolve a problem with the management of the company. Similar issues arise for a business conducted as a partnership or joint venture or through a unit trust. So often people go into business with friends or family, but the relationship breaks down because they are unable to resolve a dispute. A properly drafted agreement may prevent issues arising as the existence of the agreement often encourages the parties to act fairly. Even if the agreement does not stop an issue arising, it provides a means of resolving a dispute and protecting your interests. Without a suitable agreement, the options can end up being very expensive or very unfair. For a relatively modest sum outlaid at the start of a business venture, people may save themselves from large losses and enormous disappointment and stress.
Contact Patrick Cussen or Nicole Wilson if you are a shareholder in a private company and wish to discuss the creation of a shareholders’ agreement or you have a problem and you need a creative solution.