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If you have more than one shareholder and are unsure whether you need a shareholder agreement during the startup phase of your company, the answer will more often than not be yes – you absolutely need one.
A shareholder agreement sets the framework for how your company will be run and clearly outlines how decisions about the company are to be made and by whom, the rights and responsibilities of the shareholders, and all of the other procedures and rules that are imperative to the smooth operation of a company.
When you’re starting a new business it can be easy to get caught up in the excitement of the new venture and forget about some of the less exciting yet important things that will contribute to it’s success, even if you’re starting your venture with a friend or relative. A shareholder agreement is one of those important things that will save you time, money and protect your relationships down the track.
A shareholder agreement saves you from getting caught up in management disputes and allows you to focus on the commercial success of your business. It’s an investment that most companies cannot afford to go without.