In case you have people as co-founder, it is must to get a Shareholder’s Agreement in place before you begin with your incorporation to avoid future disputes. A well drafted and legally enforceable Shareholder’s Agreement will give you peace of mind, clear understanding of each founder’s roles and responsibilities, exit options, investments, equity sharing structure and many more benefits. Trust me, building and running a partnership business and working as a team and with the team is more complicated than it seems. Dispute between you and your co-founder may arise anytime for any small and unthinkable reason and in case you don’t have a well drafted Shareholder’s Agreement in place then it will surely stop your growth engine, kill your company, your vision for growth and your mission to build a successful company. Generally, dispute arises between founders for very small and unthinkable reasons. The following issues create disputes between founders:
- Roles & Responsibilities of each founder;
- Designation of each founder in the company;
- Compensation of each founder in the company;
- Investment from each founder in the company;
- Equity Holding of each founder in the company;
- Equity holding of each founder when any investor comes in the company;
- Exit options; and
- Many more reasons.
Therefore, it is advisable to have a Shareholder’s Agreement in place for protecting each founder’s interest in the company and also to avoid future disputes and keep the business running. You should make sure that Shareholder’s Agreement clearly states everything including the exit options for founders, who are not willing to continue further in the company. Here TratoIndia.com can help you with drafting and finalization of a perfect and legally enforceable Shareholder’s Agreement.
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