13 Apr Shareholder Agreements: Making Key Decisions
It can be a challenge to be responsible for all the decisions.
That’s why a shareholder agreement can be so valuable in a private company. In a large corporation, the typical shareholder agreement forces the directors to defer certain issues to the shareholders for approval or alters director decision-making authority so that some special thresholds have to be met.
In a smaller company, where there aren’t as many shareholders, this setup can actually lead to an unhealthy working situation and a power imbalance.
If this sounds like your small or mid-sized company, working through the series of questions below is a great way to create a positive working environment and even strengthen your partnership.
Review the list below, considering whether directors or shareholders are responsible for the decision and what percentage is necessary to approve each decision.
|
DECISION |
WHO MAKES IT? |
WHAT LEVEL OF APPROVAL? |
| A fundamental change in the business of the corporation | ||
| The approval of a yearly budget or business plan | ||
| Any operating expenditure or obligation which is in excess of those permitted by the budget or some other standard | ||
| Any capital expenditure or obligation which is in excess of those permitted by the budget or some other standard | ||
| Whether the corporation will have audited statements | ||
| The appointment of corporation auditors or accountants | ||
| The appointment of corporation bankers, lawyersand other key advisors | ||
| The setting up of corporation bank accounts and signing authority over same | ||
| The ability to contract on behalf of the corporation | ||
| The hiring or firing of officers or other key persons | ||
| The compensation arrangements for directors, officers and key persons | ||
| The implementation of any stock option plan or the issuance of any stock options |
Joel Rose
With over 35 years of experience, Joel Rose helps families – and their businesses – to prepare for the future. He offers guidance and support to help his clients create estate plans and succession plans that meet the needs of the whole family. Through his extensive professional and personal experience, Joel is known for his compassion and his ability to find a creative solution to meet each family’s needs.
Sorry, the comment form is closed at this time.