An all-important document binds direct owner investors to specific protocols governing seat appointment changes, trading status, dividend amounts, and disputes. Equity percentages often demand tight management, and so divestiture proves equally subject to consensus. Particularly with a merger or an acquisition, how does the corporate structure affect compensation? This is one of many crucial issues presented by a legally binding set of shareholder bylaws.
For more seasoned individuals engaging in shareholder agreements with boards in Chicago, you’ve seen how the middle market works. Newly incoming deal professionals have lots to glean understandably.
Power of the Chair
It happens all the time; breakups among founders occur. Sometimes, one of the owners decides to sell stock and retire, or they decide to move on to something else. For this reason, ‘Rights of First Refusal’ exist as a remedy and is usually included within a master contract between stakeholders. A feature such as this one keeps ownership close. The company remains first in line for stock buybacks and controlling parties uphold transfer restrictions, a safeguard against ownership falling into unqualified hands.
Is an Agreement Necessary?
What happens in the event of death, disability or divorce? Will stocks get tied up in probate? Does the agreement contain clauses about retaining a particular owner’s slice after a spousal split? Failure to install legally binding procedures early on in the enterprise’s life cycle leads to headaches and ulcers, causing you to wish that you had parameters later.
Are you a board member or potential start-up investor who needs help drafting shareholder agreements in Chicago? If so, schedule a consultation with Liss & Lamar PC, a Chicago franchise specialist.
Pick up the phone or visit the firm Liss & Lamar PC to get more information.