“Every shareholder has their own vision of what the company should be,” says Nate Masterson, marketing director at Maple Holistics. “While in most cases there are a lot of crossovers, sometimes there will be points of disagreement that are unsustainable. A shareholder pact can prevent a shareholder from imposing his will in a destructive way, regardless of the feelings of other shareholders. In your business partnership agreement, you should clearly define how things should work between you and your co-founders. Sending the lawyer to prepare a document and sign what the lawyer produces is a mistake. It should be a collaborative process that ideally starts with you and your partners to advance your thoughts and concerns to your lawyer. A problem that sometimes appears in the life of a company is that a shareholder loses interest and no longer contributes to the time initially expected. Another problem can arise when a shareholder is part of a competing company. To avoid disagreement, you should specify what is expected of each shareholder. You could tell how many hours per week each person is expected to work, or you could just have a general agreement for each shareholder to dedicate their best efforts to the company. LegalZoom and other online companies that offer “legal” services for less than average lawyer ratios may be tempting at first glance, but it`s a trap. The documents they give you too often do not meet the individual needs of your business, they are not maintained to reflect recent developments (and possibilities) in the law, you do not have compensation for wrongdoing committed because of their significant non-responsibility, and it is very difficult to compensate for a poorly written management contract or contract after the creation of your business. Yes, a shareholder contract is a contractual agreement.
The purpose of the agreement is to protect investments and explain what shareholders can and cannot do. However, it is not legally necessary to enter into a shareholder contract, whereas it is in the interest of each party to create one in order to avoid potential conflicts. If you have very little budget, you can form an entity via LegalZoom or Clerky. These DIY fashion sites work well for the creation of the business, because creating a unit by filing a training certificate or creative articles with a secretary of state is easy. However, they do not work well for partnership agreements, which almost always require considerable custom production, which does not involve a DIY model contract system.