What is the Purpose of a California Shareholder Agreement
May 26 2021 0

What is the Purpose of a California Shareholder Agreement?

If you started a business in California you have quite a bit on your plate. If you are going to be working with more than one shareholder, to better understand corporate bylaws and what you are required to do, getting connected with a Los Angeles business attorney will be extremely beneficial. Your Los Angeles shareholder agreement attorney can not only work with you to get a shareholder agreement developed but also guide you on what legal documents, if any, could be required of you as you proceed with your business’s operations.

The importance of a comprehensive, well-constructed shareholder agreement cannot be understated. This type of contract protects both the shareholders as well as your business. The last thing that you want to do is set yourself up for expensive legal challenges in the future, instead, you want to proactively do what you can to avoid them. The Leiva Law Firm is a Los Angeles business litigation firm that understands the critical significance of a thorough shareholder agreement and how an ineffective or poorly written one will be detrimental to a business as it grows.

What Do Shareholder Agreements in California Do?

What is the Purpose of a California Shareholder AgreementPeople who start businesses have to wear many hats and be on top of several issues to ensure that their business runs smoothly and is profitable, functions properly, and potentially has the ability to expand. The Leiva Law Firm understands every aspect of business law in California and what is needed to help business owners protect their rights and understand what responsibilities they have as entrepreneurs. Depending on the nature of your business, you may need multiple agreements and there are many types that serve very specific purposes. 

Shareholder agreements in California are one of the agreements that may be applicable for your business interests. When shareholders exist, these parties must have a clear understanding of the operations of a company they invest in. Shareholders also should have information on their rights, what their liabilities are, and what they are expected to do for the company. All shareholders are entitled to specific protections and one of them is being treated impartially. As such, a proficient shareholder agreement will define how shareholders’ interests are safeguarded from actions that other parties engage in.

Specifically, these agreements will address the following:

  • The way that companies run and are managed.
  • The number of shares a shareholder has.
  • The process of transferring shares.
  • Share pricing.
  • How much ownership the company has.
  • Rights for shareholders to purchase more shares.
  • How your shares will be paid for when the company you invested in is sold.

Speak with a Los Angeles Business Attorney Today

There are several considerations to think about when you are drafting a shareholder agreement in Los Angeles. Whether you need help putting together a capable and productive shareholder agreement or the agreement you have hasn’t covered you adequately and you are facing legal disputes, the California shareholder agreement attorneys at Leiva Law can help. Call Leiva Law today to schedule your free consultation at (818) 519-4465.

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