R. Shawn McBride recently spoke about the importance of using the correct documents for a shareholder’s agreement. Here is the transcript.
Hey, folks, it’s Shawn with you here. You may have seen my earlier videos on shareholder’s agreements or you might just generally be wondering, where do I get a shareholder’s agreement from? Where do I get hold of a good form? And here’s the problem. There is no one form.
A lot of people think that all legal documents are formulaic and I can just copy and paste. But you know what? Everything’s custom. One of the most very custom documents we see is shareholder’s agreements. They really need to be tailored to the situation.
What is the agreement among the multiple business owners? How does it work? How does the voting take place? What rights does everybody have? These are really, really pressing issues and we want to make sure we get them right. Which means something needs to be really, really custom. Now, you can find forms for shareholder agreements. There will be some available on EDGAR, the US SEC’s database of public company documents. You’ll see some for some very big companies there. I’m sure you can Google around. LegalZoom, other sites will have them. But the problem is these are all built for somebody else and their needs and their desires.
And there’s a secondary issue as well. Not only are LLCs and corporations that these might be used for governed by state laws which are different, but as we dig into them each one has their own unique certificate of corporation, bylaws, and governing documents. You really need to custom build it to that circumstance.
So the best advice I can give you is really if you’re a business owner, this is one of those ones where you probably want to stop, talk to an attorney you trust and really get it right. Talk about what you want to do, how you want to build it. Make sure they do the technical things to build it together. I am sure that a really smart business owner could pull it together and I know most of you have figured out a lot of things along the way. It’s just gonna take a lot of time and attention to work through all those details. There are technical nuances. It’s not something I recommend. You know I do recommend business owners do some other legal work on their own. Small contracts, agreements may not be worth the expense. This is one that’s fundamental to your business. The ownership of your company. What else could be more critical?
And it’s time to get it right. So look for somebody you trust. Work with them and get this thing built correctly from the beginning. So, unfortunately, I can’t direct you to that perfect form of shareholder’s agreement. But I can get you pointed in the right direction, which is work with an attorney that you trust, describe what you want to do and have it built for you.
If this issue’s resonating with you and you have other similar issues, check out our blog at www.mcbrideforbusiness.com/blog. Also, www.mcbrideattorneys.com/blog. We deal with a lot of these similar issues, so you’ll find them there.
Feel free to check out the R. Shawn McBride public page on Facebook. A lot of videos like this and other content that will help you. And the McBride for business YouTube channel. Subscribe, check it out. Reach out to me, let me know how I can help you. Share this content with other business owners so they can have help. We want to get this community going. We want as many people benefiting from this information as possible. Feel free to email me or call me at 214-418-0258. Talk to you soon. R. Shawn McBride signing off.
This posting is intended to be a tool to familiarize readers with some of the issues discussed herein. This is not meant to be a comprehensive discussion and additional details should be discussed with your attorneys, accountants, consultants, bankers and other business planners who can provide advice for your circumstances. This article should not be treated as legal advice to any person or entity. Each case is unique. Past results do not guarantee future outcomes. Freeimages.com/photographer Kimberly Vohsen.
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Posted In: Minority ShareholdersAbout the AuthorR. Shawn McBride — is the Managing Member of The R. Shawn McBride Law Firm, PLLC. Shawn works successful, private business owners in their growth and missions to make a company that stands the test of time. You can email R. Shawn McBride Law Firm or call (214) 418-0258.