Too many shareholders have lost everything because they simply failed to protect themselves with a tailored shareholder’s agreement. More and more shareholders and directors are finding themselves facing a dispute, as between their directors and shareholders. A shareholder’s agreement is essential to fully determine the basis for important decision making and to provide protection for the parties involved in the ownership of the company against the actions of the others, whether minority, majority or equal shareholders. In the event of a dispute or dissolution, a shareholder’s agreement that contains a valuation formula can carry the day.

Courts will give significant deference to a shareholder’s agreement. A shareholder’s agreement will save you tens of thousands of dollars. It will also save you from the uncertainty that comes with any court proceeding.

To successfully deal with a potential dispute among directors or shareholders, the client’s objectives and all relevant facts must be thoroughly discussed and analyzed ahead of time. Once the analysis is completed, the attorney’s strategy is then formulated based on the relevant facts and the client’s end goal.

A shareholder’s agreement is an instrumental cost effective tool. It will protect you in the event of a dispute. It should provide you with a clear framework for how certain decisions are to be made and how disputes are to be resolved.

The best way to proactively prepare for potential shareholder dispute is immediately hiring an attorney to prepare and tailor a shareholder’s agreement to suit your specific goals and needs. Do not be reactive. Be proactive.