BCS: Helping business clients with opportunities and through crises since 1995

Shareholder agreements

Shareholders provide invaluable financial backing for companies in exchange for part ownership or equity. While this setup is generally mutually beneficial, shareholders may sometimes act in a manner that fundamentally harms the company. Creating ironclad shareholder agreements can protect Georgia companies from poor shareholder behavior. 

Focus on clarity 

While it might be tempting to heavily rely on legalese and complicated wording within a shareholder agreement, easy to read and understand agreements tend to be better for everyone involved. Both shareholders and companies benefit when everyone clearly understands their roles and responsibilities. A well-rounded shareholder agreement generally focuses on: 

  • Identifying board member obligations 
  • Designing operating procedures, policies and bylaws 
  • Streamlining daily operations 
  • Complying with Georgia state law 

Be prepared for litigation 

Unfortunately, litigation is sometimes unavoidable in the business world. Companies can prepare themselves for this eventuality by including methods for dealing with litigation within a shareholder agreement. Some options include requiring parties to try to resolve the matter in an alternative dispute resolution such as arbitration before anything ever goes to court. Having a clearly written and enforceable shareholder agreement is also helpful here as companies can easily highlight how the shareholder violated his or her responsibilities. 

Companies operating in Georgia have innumerable opportunities to grow and expand. A dispute with shareholders should never hold a company back from taking advantage of those opportunities. Whether you are in the process of creating shareholder agreements or are anticipating litigation, you can learn more about your options by visiting our website.