Shareholders are one of the most important stakeholders for a company. It is them who more or less financially affect the course of the business. If the stock value, you have in the market is high then there would be more persons interested in investing in your firm and that would mean that you would have higher growth potentials in terms of putting in your project plans to action. And so, to ensure such processes take place in a smooth manner and that the rights of both parties are protected, an agreement needs to be drawn. Here are more reasons why you should do so.

A confirmation

When you have so many shareholders working with you and making investments, managing them all becomes rather complex. However by looking up  shareholder agreement sample  and preparing your own, you can ensure that any misunderstandings and misalignments in the need for shares, are managed. It also serves as a confirmation to your business processes. This way you know who is buying what and how many are giving up on what.

Minimize conflicts 

Conflicts are situations that are bound to be experienced regardless of whatever circumstances a person may be in. However, when it comes to financial matters the occurrence of these are more and more common. Hence in order to minimize such issues and handle things in a professional manner it is essential that one prepares an agreement with their shareholders. In such agreements mentioning clearly of the dispute handling procedures could also act as a guidance to overcome such situations in a positive manner.

Protect rights of the shareholder

Shareholders of any company have certain rights that they are entitled to. And by specifying such rights and obligations in the agreement the company can clearly state what such stakeholders are entitled to achieve and where their limits are. In addition to the above specifications that allows the shareholder know what he can and cannot do, stating important rights like voting, appointment of proxy and such are also essential. These helps the shareholder be more active with the company related affairs while also making an earning through dividends. Such clauses in an agreement also ensures equal treatment for all shareholders regardless of the share number they own. And this boosts the company goodwill as well.

Maintain existing shareholders

While new shareholders coming in is more and more encouraged, for a firm, maintaining their existing shareholders matters a lot. It is quite the same with a firm and its loyal customers. Accordingly, by preparing agreements that state the rights and obligations such shareholders have, especially in the case of a new share issue and such, they can ensure that they maintain these persons throughout their operations.

So consider the above benefits and do prepare such agreements with shareholders!

Please follow and like us: