Having the right business structure is just as important as having the right business idea. Your business structuring will provide your business with direction and procedures that will aid you through the life of your business.
The main type of business structuring agreements are:
- Shareholder Agreements;
- Unit Holders Agreements; and
- Joint Venture Agreements
In each case, these agreements should deal with the following issues:
- Control: Who can and cannot act as a director? What happens on death or incapacity of a director?
- Decision Making procedures: What are the protocols regarding acquisition or disposals over a certain value, hiring staff, financing, and other key business decisions.
- Distribution policies: how are distributions to be made? What are the minimum distribution levels? When can distributions be postponed?
- Transfer of equity: what is the process if someone wants to sell their equity? Are there to be pre-emptive rights? Are there to be pull along or tag along rights? What happens if a new partner wishes to buy into the business? How is the business to be valued?
- Dispute resolution: how are disputes between business principals to be handled?
- Succession planning: what happens on the death or incapacity of a business partner?