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Nov
11th

SHAREHOLDER ISSUES By: Clare

The business plan and financial considerations are not the only things that are important when setting up a small business.  The following are equally important and often overlooked.

• What are the arrangements for death or serious illness of the shareholders or directors?

• How are directors / minority shareholders protected from ejection from the board.

• In the event that the parties fall out, are there compulsory buyout arrangements for the majority buying out the minority at a fair value.

• In 50:50 companies in particular, ensure buyout provisions are clearly agreed, also who will have a right to buy from the other and how that can be determined.

• Should any decisions require unanimous assent/participation of particular shareholders.

It is much better to have agreements in place at the outset to avoid these becoming a problem later and affecting the ongoing business.

At Haxton, Chartered Accountants in West London, we discuss all issues surrounding setting up and running a business as part of company formation procedure.

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