Shareholder Agreement Service in the BVI

Shareholder Agreement

Shareholder Agreement is a document which every company with more than one shareholder should have. In other words, shareholder agreement is a contract between shareholders of a company and the company itself. Shareholder Agreement looks like a document relating to the ownership and management of the company which has to be signed by all shareholders. Shareholders agreement contains the particular rules by which the ownership of a company is held and as a private arrangement between the shareholders helps avoid problems in running the company. As any private limited company any disagreement needs to be decided by the Court and this can be very costly and cannot always go according to your plans.

Coddan's Shareholder Agreement may be used to:

• Transfer the power to manage a corporation from the directors to the shareholders, depending on your jurisdiction.
• Create an agreement among shareholders that says how the corporation will be managed, how disputes will be resolved, what will happen on the death of a shareholder, and to prevent shareholders from competing with the corporation.
• Provide for the distribution of profits through dividends and restrict the transfer of shares.

Shareholders' agreements, properly structured and funded, are a critical part of any business with more than one shareholder. A well-thought-out agreement provides an orderly way to transfer shares in the business and helps keep the business running smoothly in the face of future events such as death, disability or retirement of a shareholder.

Shareholders' agreements can take a variety of forms and can serve a variety of purposes. They are usually in writing and signed by persons who together own at least a majority of the outstanding shares of the company's voting stock. Shareholders' agreements enable a minority shareholder to exercise more control over a company that he would have otherwise.

The document outlines the structure of the company, how it will be financed, who is on the board, what you can and cannot do with shares, what happens to the profits, protection of minority shareholders, what happens to the company if there is stalemate, how the venture can be terminated and what the business and shareholders are allowed to do.

Drawing up shareholders agreement for company in the BVI. Our Shareholders Agreement can be used where two or more parties wish to carry on business together as a limited company and wish to regulate the relationship between shareholders and determine actions in the event of deadlock. It is suitable for a group of shareholders working together who wish to arrange for particular management decisions (relating to the structure of the company) to be taken unanimously and allows each shareholder to appoint one director. You can insert the names and details of the parties involved, and the wizard will format the document accordingly.

A Having a Shareholder Agreement advantages:

• By having a Shareholders' Agreement the situation where changes in one shareholder’s personal circumstances can have an effect on the company or other shareholders within the company is prevented.
• A Shareholder Agreement also provides a level of protection for all of the parties involved in the ownership of the company against the actions of the others.
• Typically shareholders rely on common sense and tolerance of others to resolve matters; they may well be family members or long-term friends. In either situation anything that can be done to reduce the possibility of conflict is a good thing.
• It is common for a newly formed company to be run in the initial stages more like a Partnership. This however is not a suitable basis on which to continue operation as it grows and matures; there is a need for structure and a Shareholders' Agreement is one of the cornerstones of the company.
• While there is a lot to consider when starting a new company, it is prudent to take a longer-term view for the future. The mere formation of a company is relatively simple to achieve and allows one to start trading, it does not however confirm what responsibilities and more particularly the limits of responsibilities of the shareholders (owners) are.

Every company must have at least one shareholder. This person's name and address will also appear on public record. We can provide you with a nominee shareholder.

Upon taking on the duties of nominee shareholder, we would hold your shares on trust in the form of a Nominee Shareholders Agreement. Our Nominee Shareholders Agreement would serve the purpose of ensuring that your identity as Beneficial Owner(s) is only known to us and not put on public record at the Company's Registry. An original Share Transfer Form signed by us, but undated, will also be issued to you, so that you can have the security of being able to transfer the shares at any time.

If your company will issue shares, there should be a shareholder agreement, even in a small company. Any time two or more people are involved in running a company, the possibility for a dispute arises and having a framework to work within promotes a healthier business.

Please contact us for more information. If you have any queries, please call us during business hours and speak to one of our highly trained incorporation specialists. You can call us by phone 800-081-1510 or + 44 (0) 207.935.5171, or make an initial consultation request.