Welcome to Michael Paterson & Associates

This site looks simple because you don't have a Web Standards compliant Web Browser. You can't see the site design, but all of our content is still available. Please enjoy your stay and consider upgrading your browser to view our full site design.

News

.

 

Advice on a Messy Shareholder Agreement

October 28, 2010

I worked this week on some advice on a proposed shareholder agreement that had been provided to a client of ours.

According to our instructions, there were quite a few disparities between the deal that our client thought had been done, and the wording of the shareholder agreement. Some problems included:

(a) shares were required to be allotted to him, but they were already allotted in May 2010;

(b) the directors were charged with managing the day to day running of the business, when it had been agreed that this would be the responsibility of our client's management company;

(c) future funding would be by the shareholders equally, when our client was not meant to be called upon for capital contributions;

(d) there was a weird put and call options in relation to the sale/purchase of shares in the event of a dispute, which we recommended should be deleted altogether; and

(e) the mechanism to allow a shareholder to sell his/her/its shares was overly-complicated when a very simple formula would suffice.

The client is going off to have a meeting with the shareholders to try to get agreement on a few ideas which should result in a much simplified version #2 of the agreement, which we will again review


‹‹ Back to headline listings