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Forming or entering into a business with others, whether as a shareholder or as a partner, is probably one of the biggest commitments one can enter into.
It is also an action that can expose the investor to unprecedented levels of personal liability and expose their personal and family assets to risk.
It is therefore essential for the investors to have an agreement in place, whether that be a partnership agreement if a partnership is being formed or a shareholders agreement if a company is being formed.
The agreement will leave each investor knowing what is required from them as well as what they can expect from their fellow investors and because running a business is not always plain sailing it will provide a firm point of reference should issues arise between the investors. By providing this firm point of reference an agreement can avoid a dispute arising or assist in the timely resolution of a dispute that may have already arisen and this ensures as much time as possible is spent on the continued running of a business should issues arise.
Although standard forms of these agreements can be downloaded from the internet, the reality is that if either a shareholders or partnership agreement is going to properly legislate for your investment into a business then it needs to be drafted by someone who knows you, your business and what each one of you expects of the your fellow investor.
At JMP Solicitors we have extensive experience in preparing both partnership and shareholder agreements, whether they be for the start up business or an on going business . We also advise on the implications of these agreements when investors are asked to enter into them and then go on to negotiate amendments on their behalf if necessary.