Updating shareholders’ or operating agreements and other important documents such as bylaws and your corporate articles are an important part of corporate life. These important corporate documents for your LLC or Corporation are just part of protecting the “corporate veil” that separates your business from your personal life and assets. Changes in local, state or federal law may require updates to bylaws and other corporate documents to ensure compliance. Most changes are brought about by circumstances that develop along the way, and issues that were not adequately addressed in the original documents.
Preventing Conflicts Between the Owners of a Company
The Watkins Firm has more than 40 years of experience preventing conflicts between the owners of a company by ensuring regularly updating shareholders’ or operating agreements and how those changes are integrated into associated documents such as the bylaws and/or corporate articles. Based on this extensive experience I can tell you when the corporate documents are in order and regularly updated there are far less opportunities for disputes between members in an LLC or shareholder disputes in your corporation.
Many business people attempt to save a few dollars at the outset by downloading these forms from “legal” websites and do not give the important clauses contained within the appropriate focus and attention they deserve. This simply sets the table for substantial financial infighting and disputes down the road.
I can tell you from personal experience they lack most of the actual legal underpinnings and paragraphs that help the business to survive real day-to-day challenges. Disagreements between LLC members (owners), shareholders, and minority shareholders can be virtually eliminated if the corporate documents are well crafted. How do your existing corporate documents establish the process for handling life events such as a divorce or personal bankruptcy, or even the death or disability of one of your majority stakeholders? How will you value the position of a fellow stakeholder if they need to sell their interest and who has first right of refusal to buy that stake?
The Importance of Updating Shareholders’ or Operating Agreements
Now that you know a bit more about the importance of updating shareholders’ or operating agreements ask yourself a simple question: how do you think your corporate documents will hold up in a dispute or lawsuit? These primary issues and many others should be considered, addressed and codified in the original agreements in the beginning, when everyone is working cooperatively toward building something together. Not when a challenge has arisen and updating operating agreements and corporate documents is the only way to ensure that the business survives. These decisions are much more difficult, emotional and expensive down the road.
If you have not given these documents the attention they may deserve or have neglected them altogether let’s have a conversation. It won’t cost you anything and will give you an opportunity to get to know the Watkins Firm. The attorneys at the Watkins Firm have more than four decades of experience serving San Diego and Southern California business owners and employers. We invite you to review our Podcast Episode 24 – Corporate Governance, the strong recommendations of our clients and contact the Watkins Firm or call 858-535-1511 for a complimentary consultation today.
