When starting or managing a business, having clear agreements in place can prevent disputes and protect your investment. Our Troy, MI business lawyer works with business owners to draft shareholder and partnership agreements that set clear expectations for how a company operates, how profits are distributed, and how decisions are made. These agreements are essential for maintaining trust among partners and shareholders while providing a roadmap for handling disagreements or changes in the business.
Shareholder And Partnership Agreements And Their Purpose
Shareholder agreements are used in corporations to define the rights and responsibilities of the owners. These agreements often cover how shares can be bought or sold, voting rights, dividend policies, and what happens if a shareholder wants to leave or passes away. Including provisions for dispute resolution and restrictions on transferring shares can prevent conflicts and help keep the business stable. We work with clients to draft agreements that reflect the unique needs of their company and its owners.
Partnership agreements serve a similar function for partnerships, whether general or limited. These agreements outline each partner’s contributions, responsibilities, and share of profits and losses. They also address decision-making authority, admission of new partners, and exit strategies if a partner leaves the business. A well-drafted partnership agreement protects both the business and its partners by clarifying expectations from the beginning.
Handling Changes And Disagreements
Businesses evolve over time, and disputes can arise even with agreements in place. Shareholder and partnership agreements can include provisions for resolving disagreements, such as buy-sell clauses or mediation requirements. These measures can help prevent disputes from escalating into litigation and minimize disruption to daily operations. Working with a lawyer to draft these provisions allows you to address potential issues before they become problems.
Planning For Succession And Exit Strategies
Another important aspect of these agreements is planning for succession or exit. In a shareholder agreement, this may involve defining how shares are valued if an owner sells or passes away. In a partnership, it may include steps for a partner to withdraw or for the business to continue smoothly if a partner can no longer participate. Clear exit strategies help protect the business and reduce uncertainty for everyone involved.
Don’t Put Your Best Interests At Risk
If a shareholder or partnership agreement is outdated or does not address key issues, it can lead to confusion and disputes among owners. Without clear rules on decision-making, profit distribution, or the process for handling a partner or shareholder leaving the business, disagreements can escalate quickly.
Conflicts over ownership percentages, financial responsibilities, or management authority may result in litigation, which can be costly and time-consuming. In some cases, the lack of proper provisions can even threaten the stability or continuity of the business, leaving owners exposed to financial and operational risks. Regularly reviewing and updating agreements with legal guidance helps prevent these problems and keeps the business running smoothly.
Move Forward With Legal Support
Drafting shareholder and partnership agreements is a proactive step to protect your business and your relationships with partners and shareholders. Partnering with our Michigan law firm will give you guidance tailored to your business goals and helps create agreements that support long-term stability. At Gudeman & Associates, P.C., we have decades of experience helping businesses in Michigan put strong agreements in place. Contact us today to discuss your goals and learn how we can assist you.
