Shareholder's Agreement – why don't you have one?

If you own a company with another shareholder who you are not married to, you need a Shareholder’s Agreement.


That is easy: it lets you control your destiny, rather than someone else.

Without a Shareholder’s Agreement you could find your shareholder’s ex-spouse becomes an owner in the company – think how fun that will be.

Without a Shareholder’s Agreement, if another shareholder dies, you could now be owning the company with an heir who has no interest in working in the company.

Without a Shareholder’s Agreement, if you want to buyout another shareholder, you’ll have to hope they agree, rather than be able to force the issue through the use of a shotgun clause.

The most common reason people don’t have Shareholder’s Agreements is that they don’t want to spend the $ 1500 – $ 5000 (depending on complexity) to have the agreement drafted. Any litigation involving Shareholder’s disputes will easily run into the $ 20 000 + range and the result may be uncertain: why have a Judge control your fate when you can do that in a Shareholder’s Agreement?

Another common excuse, and one I think is very funny whenever I hear it: my sibling is my co-shareholder and we get along. Really? You never fought with your sibling growing up, ever? Of course you did and when you did Mom or Dad was the Judge. Add to the mix the spouse of your sibling, driving your sibling’s decisions and again, I ask: really, you never fight?

Spend the money up front. Get a Shareholder’s Agreement: it will save money and stress in the future.

Inga B. Andriessen JD