Attorneys in Los Angeles for Shareholder Agreements
After starting a business, it is crucial that you familiarize yourself with corporate bylaws and what is required of you. Although they cover various topics that can help you along the way, they do not cover critical issues that you may face while working with two or more shareholders in your company. For this reason, it is imperative that you seek the legal guidance of a skilled and experienced business lawyer in Los Angeles who can help you draft a shareholder agreement and discuss various other legal documents you may need moving forward.
Shareholder agreements are designed to have both the company and the shareholders’ best interests in mind. As the company grows and goes through changes, it is crucial to have agreements in place that outline conflict resolution processes. Having a clear and legible shareholder agreement in place can help you to avoid costly legal battles down the road. Opting to establish a shareholder agreement without the assistance of a skilled and knowledgeable legal team can have costly consequences in the future. For this reason, it is crucial that you reach out to a legal team as soon as possible.
The attorneys at Leiva Law Firm are well-versed in business law matters. Our team will create a contract that helps you understand rights and responsibilities that you have as a shareholder. Our team will help you understand what options you have and help you by ensuring your legal rights and best interests are protected. The knowledgeable attorneys at Leiva Law Firm are available to help you at your earliest convenience. Contact our law firm today to schedule a case evaluation so we can get started with your shareholder agreement as soon as possible.
What is a Shareholder Agreement?
When it comes to operating businesses, there are various types of agreements put in place to protect interested parties. One common agreement we see in California is a shareholder agreement. This agreement is a legal document that is designed to outline how a company will operate. This document outlines the shareholders’ rights, what liabilities they have, and their obligations to the company. Shareholder agreements are designed to ensure shareholders are treated equitably and that they have protections with regard to various actions that may be taken by other shareholders to a company as well as outside parties.
Shareholder agreements are packed with imperative information that specifies the privileges and protections provided to shareholders. These agreements further define how companies are to be managed, how many shares you hold as a shareholder, and details surrounding your ability to transfer shares to third parties. Shareholder agreements will state the fair pricing of each share, the percentage of company ownership, pre-emptive rights for existing shareholders with regards to purchasing other shares, and how you will receive payment should the company be sold.
What Shareholder Agreements Address
Above all, shareholder agreements are designed to explain what happens to a shareholder if they pass away, decide to leave the company, or retire. Shareholder agreements can cover various other imperative topics, including:
- The conditions surrounding a shareholder’s membership on the board of directors
- Who are the officers of the corporation
- Guidelines surrounding the termination of employment of a shareholder
- The life insurance policies of shareholders
- The process for dispute resolutions
- The majority and supermajority voting requirements for decision making
- Options, rights, and obligations for buy-sells
- Handling of the termination or dissolution of a corporation
- Bonus provisions
- Agreements surrounding the employment of shareholders and employees
Shareholder agreements are essential when it comes to ensuring a smooth and equitable transition upon the retirement, disability, or death of a shareholder. It is crucial that shareholder agreements are drafted with care and consideration to ensure your legal rights and best interests are protected. Working with a knowledgeable attorney from Leiva Law Firm will ensure your shareholder agreement is clear and concise.
Things to Consider when Drafting a Shareholder Agreement
There are various topics that arise when it comes to discussions surrounding shareholder agreements. It is crucial that you address as many potential issues as possible. Doing so will ensure your legal rights are protected should you encounter any issues in the future. Some of the most important topics to consider include:
Restrictions on Transfers: Will there be any prohibitions on transferring shares to others?
Right of First Refusal: Will other shareholders be provided the opportunity to purchase a shareholder’s shares before being offered to a third party? Will founders have any rights to purchase the shares of others before they are offered to investors? Are there certain permissible transfers? Are transfers only able to be performed pursuant to a bona fide written offer from the buyer?
Right to Repurchase: Will companies be provided the ability to purchase shares should a shareholder pass away or have their employment terminated? How will the price of shares be determined? How will the price be paid and to whom?
Whether the Shareholder Agreement will Govern Various Shareholder Decisions: Are there any items in particular that need to be identified for the approval of shareholders? Are certain items required to have a supermajority vote from shareholders? Are shareholders provided the right to vote in individual classes?
Do Shareholders Agree to Board of Directors Matters: Are there specific people elected to the board of directors? Will various groups of shareholders be provided seats on the board of directors? How are spots filled and directors removed?
Rights Provided to Owners with Regards to Purchasing New Shares: Is each shareholder provided the right to purchase new shares should issues arise with the company? Are there certain requirements for ownership that must be met before these rights are provided? Are there specific issuances that do not trigger these rights?
Dynamics of Sale Transactions: Are there situations where minority owners in co-sale/participation rights/tag along rights situations where shares are required to be purchased? In drag along rights, are majority owners the only parties able to force minority owners to sell their shares?
Working with a knowledgeable business lawyer in Los Angeles can help to ensure these and various other issues are addressed in your shareholder agreement. Addressing problems early on can help you avoid lengthy and costly legal battles in the future.
Other Services our Los Angeles Business Lawyers Provide
The business lawyers at Leiva Law Firm in Los Angeles not only help clients by drafting shareholder agreements, but we provide legal services should disputes surrounding shareholder agreements arise. Our team has a thorough understanding of our clients’ objectives and strategies and we remain focused on helping each client accomplish their goals. Some of the disputes we help shareholders resolve include those surrounding:
- The breach of a shareholder agreement
- Disputes between majority and minority shareholders subject to agreements
- Buy-out agreements
- The dissolution of a business
- Shareholder appraisal rights
- The merge and acquisition of a business
- Hostile takeovers
- Breach of fiduciary duties as well as conflicts of interests
- Disputes between owners and managers (derivative claims)
Our team at Leiva Law Firm has decades of experience helping business owners, partners, and shareholders protect their legal rights. Regardless of whether you need a shareholder agreement drafted, explained, or assistance in handling disputes in court, our business lawyers in Los Angeles are available to help you. We provide effective, proven, and competent legal representation to shareholders that ensures they are in the best position possible to protect their legal rights. We help educate our clients with regards to their rights and responsibilities so we can determine the best options available for them to proceed together. Contact our law firm today to see how we can help you with your shareholder agreements and disputes.
Leiva Law Firm is Here to Help You
It is critically important that you take the steps toward protecting your legal rights and best interests as a shareholder in the state of California. Although the drafting of shareholder agreements is relatively simple, it is imperative that you take various steps to ensure your legal rights and best interests are protected. Establishing a shareholder agreement with the assistance of a skilled business lawyer in Los Angeles can help you avoid any hassle you may face moving forward.
The attorneys at Leiva Law Firm have extensive experience helping business owners throughout southern California with the drafting of and modifying existing shareholder agreements. Our team strives to help shareholders fully understand legal options available to them so they can decide what specific criteria they should include in their shareholder agreements to best suit their business needs. If you are interested in opening up a business with one or more shareholders, contact our team at Leiva Law Firm today. Call our legal team at (818) 703-1777 to schedule a consultation so we can discuss options available to help you move forward at your earliest convenience.