San Diego Corporate Business Lawyers
There are several documents that make up a corporation, including shareholder agreements and the corporate bylaws. Bylaws establish how a corporation is to be run. They establish the way the corporation will be governed and usually define requirements for an annual meeting, and the need to keep minutes for those meetings. Bylaws describe how officers are put in place, the procedure for voting and how notices will be given to shareholders.
Why Do You Need a Shareholders Agreement?
A shareholders agreement defines the roles of the shareholders and their responsibilities to each other and the company. It also provides critical succession planning to allow the company to survive a major life event for one or more of the shareholders such as divorce, bankruptcy, incapacitation or death. Negotiating the value of a shareholder’s stake downstream when other conflicting interests are involved distracts the business leadership from running the day-to-day business and drives up the costs associated with resolving the issue or dispute.
The shareholder agreement also stipulates how the shareholders will be involved in the active operation of the business. Will shareholders become officers of the corporation? Will they be included in the board of directors? The agreement will also address what happens when a shareholder is no longer willing or able to continue to participate in the business. Usually, a “buy-sell” agreement establishes the process for valuation of the shareholders interest and how the company itself (or other shareholders) can purchase their interest.
What Happens When There is a Conflict Between the Corporate Bylaws and the Shareholder Agreement?
An effective shareholder agreement should also address what should happen in the event that a provision of the agreement is in conflict with the corporate bylaws. The shareholders agreement is a document that is highly customized to the specific shareholders and their relationship. It should take priority over the bylaws, and if a conflict is identified the bylaws should be amended to address the issue.
Experience and Effective Business Counsel is Important When Selecting a Business Attorney
The Watkins Firm has been serving the San Diego business and corporate community for decades. We have helped to establish thousands of businesses in almost every niche imaginable. We have helped those businesses to navigate the hazards and obstacles along the way, and to survive and thrive. An attorney shouldn’t just help to negotiate and create strong legal documents. We are here to serve as a valued business counselor and advisor. We will help you to protect your assets and your business, and take the steps necessary to achieve your business objectives.
Contact our office, or call us at 858-535-1511 to schedule a free consultation. We will have a thorough discussion about your business, and provide a strategic plan that you can implement. You will have the benefit of the experience of thousands of businesses like yours, and a network of contacts and relationships that will help your business to grow.