Shareholders’ Agreements: the “pre-nup” of companies…. Reaching agreement before the sh*t hits the fan
On starting a company with more than one shareholder, shareholders are often advised to make a Shareholders’ Agreement.
While a Shareholders’ Agreement is by no means a legal requirement, shareholders are well advised to record their agreement at the outset of business operations in order to regulate the way business between them is conducted.
A Shareholders’ Agreement is usually formed at the beginning of a new business venture. A Shareholders’ Agreement is a binding contractual arrangement between shareholders and governs their relationship with one another, their business relationships and arrangements. It also sets out the shareholders’:
Quite often shareholders will ask whether a Shareholders’ Agreement is actually needed particularly when the business is young, relationships are good, and finances may be tight.
So, why should shareholders seriously consider entering a Shareholders’ Agreement?
While Shareholders’ Agreements should always reflect the unique needs of the particular company, its business operations and the shareholders, there are a range of provisions which are generally included:
Having a Shareholders’ Agreement in place at the outset can prevent disputes and will facilitate the smooth operation of companies. No matter how well shareholders know each other, conflict is common, with disputes often arising when a shareholder wants to sell their shares, if the company is not performing as well as hoped or if the shareholders want the company to go in different directions.
The initial cost in setting-up a Shareholders’ Agreement is nothing compared to the costs of disputes and you should therefore view the cost of preparing a Shareholders’ Agreement as an investment. An investment in the smooth-running and stability of your company.
Cross the T can assist you in preparing a Shareholders’ Agreement which is tailored to your needs. All parties will need to be in consultation and negotiation throughout the process, and we can guide you and provide the best advice on the risks, those provisions that are required to respond to your company’s particular needs and the best way to secure each party’s rights in the agreement.
Grants can prove a useful source of cashflow for your business or a particular idea, project or venture.
In preparing a grant submission, be sure to provide as much pertinent information as possible in a clear and concise manner. Break down the: what, why, who, how and where.
Make it exciting, share your passion!
By definition, the act of streamlining your business processes aims to increase your efficiency, simplify tasks, remove unnecessary steps in your process and eliminate waste.
In order to establish how best to streamline your processes, you need to consider each step of the process to ensure that it adds value.
Consider automating repetitive tasks and remove bottlenecks wherever possible.
How do you measure the success of your business? Is it profit or is it if you have investors knocking at the door…..regardless of whether your business is a success yet, it is imperative that you focus on your cash flow and optimise it.
Here are just a few tips to help optimise your cash flow:
And remember, a sale is not a true sale until the cash is in the bank!
When you hire a worker, you must check if they are an employee or a contractor.
Why is the difference so important?Why is it so important to determine whether the person that you are hiring is an employee or a contractor?
The test for a contractor is a little more difficult. Unfortunately, it is not as simple as saying "they call themselves a contractor and we hired them under a contractor agreement", or "they have their own business and ABN".
In determining whether the person you have hired is genuinely a contractor and not an employee, you need to make an assessment in light of all of the circumstances, taking into consideration the decision matrix provided by the ATO including:
Sham contracting can arise in a range of circumstances including:
Going into partnership with one or more business partners is a common business structure.
Like all relationships though, issues could arise from time to time and it is therefore imperative to have an appropriately drafted Partnership Agreement in place.
Things to think about in your Partnership Agreement:
- performance obligations of each of the partners
- decision making power of the partners
- how income or losses will be distributed
- how the business will be controlled
- capital contributions
- what happens on the death of a partner
- winding up the partnership.
No matter the nature of your start-up or small business, there are a range of common legal issues which you will need to turn your mind to.
These legal issues include: