Shareholder Agreement: Guiding Force Behind Every Organisation

It would not be a misnomer to state that shareholder agreement is life and soul of any business partnership. Since business partners are also the shareholders of the outfit, it is very essential to have a written document about the rules and regulation that would govern the partnership, a set of agreement which every partner will have to follow. It also determines what stake every partner has in the company and how the profit and loss stand to be distributed. It, therefore, becomes very clear that shareholder agreement is an immensely essential element for smooth functioning of any organisation.

Whether an organisation has two partners or many, the utility of shareholder agreement simply cannot be minimised. In fact it would not be wrong to state that more partners are there in an organisation more the need for an agreement is felt. Shareholder agreement includes informations like the names of the shareholders, board members and other office bearers. The agreement also must clearly state that what happens in case one or more partners decide to end their association with the company as also in case when disputes arise. What is most heartening about share holder agreement is the fact that preparing a shareholder agreement costs very little.

All these points clearly indicate towards one thing, that shareholder agreement is absolutely important and a guiding force behind any organisation. It is imperative for partners to have an agreement which actually decides as to how the company would be run. The value of shareholder agreement, therefore, can easily be understood.

Lastly it must be added that such an important document like shareholder agreement should be protected at all cost for it contains some of the most sensitive information about the enterprise as well as the people who run it.