Shareholder Operating Agreements
Business Formation
I
f you are the sole proprietor of a company, you may be the only person making decisions for your business. However, most corporate structures involve multiple people that assist with daily operations. This is true for both small family businesses and massive corporations.
For any business that involves multiple partners, a comprehensive plan and structure is necessary. In the case of any unforeseen event, an agreement can help to keep your business thriving.
A shareholder or operating agreement can be useful in the following circumstances:
- If a partner or owner retires
- If a partner or owner becomes disabled
- If a partner or owner passes away
Any type of operational restructuring will present less of a threat to the future of your business if a well-drafted agreement is in place.
Unfortunately, business partnerships sometimes end in disagreement. In extreme cases, these disagreements can escalate to commercial litigation. You can decrease the likelihood of a lawsuit with a well-planned operating shareholder agreement.
When you need a shareholder operating agreement in Florida, contact the legal professionals at Farrow Law Firm. Our experienced business attorneys will help to protect your interests. We can draft agreements that will prevent expensive and frustrating partnership disputes.
The attorneys at Farrow Law Firm have a passion for fairness. Our premier team will help you to draft a comprehensive shareholder operating agreement. We proudly serve clients in both Broward and Miami, Florida.
Shareholder Agreements
For people who run a small company, a shareholder agreement is crucial. These formal agreements can make the difference between a thriving business and bankruptcy.
All businesses are subject to unforeseen occurrences. Because of this, preparing for risks is essential. Shareholder agreements are arrangements that define the relationship between shareholders of a company.
Typically, these agreements restrict certain types of actions among shareholders. For example, some shareholder agreements prevent individuals from transferring their shares to someone else.
Shareholder agreements also provide guidelines in the event of the loss of one of the business owners. These documents specify what happens to the shares of an owner who has died or become incapacitated.
Events like this present a challenge for any company. But a predetermined agreement can help to keep the business functioning smoothly.
Agreements may also specify the ways in which a shareholder can dispose of their stake in the company. This will become relevant if a shareholder wants to retire or plans to leave for any other reason.
Some companies may worry that there will not be adequate funds to buy the shares when a stakeholder divests for unforeseen reasons. In a case like this, an agreement may allow for the purchase of disability or life insurance. This insurance policy can provide the money necessary to buy the shares in question.
At Farrow Law Firm, we will examine the organizational structure of your business. We will use this information to help you identify risks.
A shareholder agreement can help you to avoid the worst outcomes during challenging times. This could include an unforeseen tragedy or shareholder and partnership disputes.
Operating Agreements
Shareholder agreements provide a framework for handling problems that involve the people with a particular type of stake in a company. Although they are similar, an operating agreement is distinct from a shareholder agreement.
Operating agreements are contingency documents that are used in the context of limited liability companies. These businesses have members, rather than shareholders.
Operating agreements address many of the same contingencies as shareholder agreements, such as:
- The death of a member
- Unexpected disability of a member
- Divestment of stake in the company
The terms and conditions of an operating or shareholder agreement can vary widely. The needs and structure of your business will determine which contingencies the agreement will cover.
The arrangements specified in a well-crafted shareholder operating agreement will take into account the challenges that your company might face. When you draft an operating agreement with the help of a qualified legal professional, you can ensure that your company will be prepared for the unexpected.
The best operating agreements will be derived from a clear vision of the company’s goals, values, and objectives. Operating and shareholder agreements can be written to specify:
- Management methods and structures
- Restrictions on the transfer of stake in the company
- Proper distribution of profits and losses
- Member or shareholder rights and responsibilities
- Protocol for the resolution of disputes
Drafting a shareholder operating agreement is an investment in your company’s future. Do not let unplanned events take you by surprise. Consult with an experienced legal professional.
Contact the Premier Business Law Firm in Broward and Miami
The business attorneys at Farrow Law Firm can help you to plan for the future of your company. We will help you to draft an agreement that protects your interests. With our firm’s flat-fee structure, you will never receive unexpected bills and fees.
Do not wait until problems arise. Make sure that you have a plan to keep your company thriving in any circumstance. Contact the team at Farrow Law Firm today for an initial consultation.
