Are you searching for experienced attorneys to update your shareholder agreement in San Diego or Southern California?  Updating shareholder agreements and corporate documents is a regular part of the evolution of a business.  Situations change, laws change, new shareholders come and go and the nature of the underlying business itself is constantly developing.  These factors can create the need to update a corporation’s shareholder agreement or the associated corporate bylaws.

Important Takeaways on Shy to Update Your Shareholder Agreement in a California Corporation:

• Things change, businesses change, investors change, profitability changes.  Your shareholder agreement should be consistently, at least annually updated to reflect any changes in the business or the marketplace.
• The relationship between the owners of the company is governed by the shareholders’ agreement.  Prevent disputes and increase the value of your organization through effective governance and compliance.
• One of the largest sources of business lawsuits are disputes between shareholders of a corporation.  Protect the corporate veil of the company, the rights of your investors, and responsibilities of those who own your company.

Why is It Important to Update Corporate Documents Regularly?

When some corporations are started, well intentioned entrepreneurs may download forms or copy them from another existing source.  Legally there can be several discrepancies between these documents that can lead to internal shareholder disputes and expensive business litigation.  In many cases, your business is growing and expanding and new opportunities require the company to update your shareholder agreement in San Diego or anywhere in California, as well as corporate by-laws to ensure compliance, and to take advantage of new opportunities such as new investors or integrating the target of a merger or acquisition.

What Does an Effective Shareholder Agreement Accomplish?

Clearly specifying the responsibility, roles, rights, and voting rights of each shareholder ensures your corporation the best opportunity for success.  When all parties are “rowing together” your corporation can accomplish great things.  Most shareholders are interested in controlling their investment in the company while protecting that stake from outside influence or risk.  You may not wish for a shareholder to sell or transfer their interest in your company to another person or entity.  The corporation’s shareholder agreement and associated corporate bylaws must be crafted with precision.

Pro-Tip: “We’re talking about the relationships between people. If you have a company, and let’s say there’s three or five people that are shareholders in this corporation, life happens, unfortunately, people die, they become incapacitated, they get divorced, they file personal bankruptcy. So why is it important to address what happens in those events upfront in an operating agreement in this case?

It doesn’t cost that much money and we already have them on file. And not only do we automatically do it for you, we go through it and we go through it with the areas that are important for you to think about and to know and make choices on and to have an explanation as to the ‘hows’ and the ‘whys.’  So when ‘this’ happens, which you never think it could happen, you’ll remember that, ‘oh yeah, we do have a clause for what happens to Uncle Joe can’t participate anymore.’

This is a long document, but it’s in there, it’s there for you. It’s a framework and it gives you guidance on the steps you should take. How are we going to value that person’s interest? Who gets the first shot at buying them out? A lot of what ifs. And you can’t account for every possible what if on the planet, but there are 95%, 99% of the what ifs you may come across in your life that can be covered by your standard shareholders’ agreement.

And if I don’t cover them up front, and now you’re three years down the road and making money and we’re rocking at it and boom, something happens. What’s the cost? What’s the disruption? What happens when the wheels come off if you don’t address it up front?

You’re going to spend a LOT of money unnecessarily to resolve a dispute about…you guessed it… money.  If there’s a lot of money, there’s a lot of fights. And what do they say in the military? … failure to plan is a plan to fail. This is automatic. We make you go through these things. We improve your knowledge of how these things work, and so when you’re having everyday discussions with people you do it with less stress and you’re prepared for a lot more than you would be had you just tried to form it yourself.

When businesses are starting up, there’s an energy to that!  There’s an excitement. We’re all pulling the same direction. Those conversations are a lot easier at that point than they are three or five years down the road.  It makes you feel good when you know you planned for a lot of things. Now you can focus on making money and it makes your company worth more money and as you go down the road.” – Dan Watkins, Founding Partner

Update Your Shareholder Agreement in California to Ensure Corporate Governance and Compliance

Your corporation should update a shareholder agreement in San Diego and maintain minutes and other corporate documents as a part of corporate governance and compliance which protects the corporate veil of your company.  Our seasoned business and contract attorneys provide sound business general counsel and work with our clients to implement, monitor and update important corporate documents.

The Watkins Firm has served San Diego businesses for decades, and has deep experience and expertise in these matters. We invite you to review our podcast Episode 34 – Business Formation as well as the strong recommendations of our clients and contact the Watkins Firm or call 858-535-1511 for a complimentary consultation today.  Review existing shareholder agreements and corporate documents. and  update them to reflect the growth and changes in your business and to ensure effective corporate governance and compliance.

Meet Daniel Watkins:

Daniel W. Watkins is a true people person who sincerely listens. He cares deeply about what others are going through.  Dan enjoys digging into the facts and finding creative solutions to problems.  He contributes his insights candidly and constructively.

Dan’s interest in people make him deeply invested in every relationship and his exuberant personality makes him a true litigator. Dan fights for his clients with a fierce and calculated commitment.

Dan has practiced in the areas of business, medical practices and healthcare business, high tech/science, real estate and employment defense law since 1987. He is a trusted litigation strategist and true trial attorney with over 50 jury and bench trials to his credit. Dan has successfully represented both large companies and individuals and achieved substantial victories in well-publicized trials throughout California and the U.S.

He is experienced in business and corporate formation and administration, as well as all forms of alternative dispute resolution, including binding arbitration and mediation.

THE ROAD TO BECOMING A BUSINESS LAWYER AND LITIGATOR

Dan has almost 40 years of experience working with, for and against some of the largest insurance companies in the country. He has successfully tried and litigated cases in the areas of Healthcare Compliance, Commercial Litigation, Unfair Business Practices, Fraud, Breach of Contract, Battery, Premises Liability, Product Defect, Medical Malpractice, Discrimination, Sexual Harassment, Construction Defect, as well as Unfair Competition, Defamation, and Trade Secrets.

In December 2003, Dan commenced litigation against Health South Surgery Centers-West, Inc and its’ subsidiaries, exposing the company’s extensive mismanagement and misconduct of its’ surgery centers. Dan has also been asked by some of California’s largest municipalities and corporations to conduct legally required investigations into matters involving alleged employment discrimination and harassment.