What If Part 2…
In part one of this article we considered what would happen if your business partner/fellow shareholder were to die. In this part 2 we look at other issues which a business owner in business with others need to contemplate: the ‘what if’ questions.
Consider these examples of issues that can, and in fact invariably do, arise – what if your business partner/s or fellow shareholder/s:
- wants to take the business in a different direction
- incurs, without mutual agreement, a hefty business expense
- sells a business asset without your approval
- is ill and off work for an extended period of time
- meddles in aspects of managing the business normally dealt with by you
- agrees a staff salary which you consider excessive
- approaches a lender to finance the business without consulting you
- will not agree on the amount of profit/dividends that can be taken from the business.
Interestingly, thinking though, talking and mapping out parameters in a legal agreement (such as a shareholders, partnership or LLP agreement) helps flush out problems before they become major issues. The process ensures that each business owner is aware of without consent decision making and financial boundaries and each has the comfort of knowing what happens if one of you becomes ill (or dies) with mechanisms in place to protect both the business and the person who is ill.
Formalise your working arrangement with a legally binding agreement which protects both the business and your stake in the business.
Call now for a free initial, no obligation chat with a commercial solicitor on the right agreement for your business – be it a shareholder, partnership agreement or an LLP agreement.