To Fix or Not to Fix
Discover the key differences between “fixed”, “non-fixed”, and “special” unit trusts and their impact on tax and land tax benefits. […]
Acis, current as of: 26 October 2016.
Most of us would heartily agree that we’d prefer to walk through life assuming the bad stuff happens to someone else. This is no truer than for people who are starting a new business venture.
When you’re having a conversation about risk with a client in this position, we all know that one of two things can happen:
In both instances, this is the wrong outcome! The cost of establishing a shareholders’ agreement at the outset will invariably seem minimal if people can manage, or avoid entirely, a host of unforeseen circumstances down the track.
Following are some tips to support this all-important conversation you’re having with your clients.
A shareholders’ agreement enables business owners to deal with important issues like:
Hindsight Pty Ltd has three shareholders, each with expertise necessary for the operation of the company’s business. Each shareholder contributes $100,000 and verbally agrees to remain with the company for a minimum of five years, with an option to stop working at that point. They have a business plan but no shareholders’ agreement.
Now, imagine the following scenarios:
The great benefit of a shareholders’ agreement is that it focuses attention on the issues that each person considers important, and how they will deal with any problems that may arise. In doing so, one or more of them may decide they do not want to be a part of the venture at all, or that the relationship must change to accommodate commercial reality.
Preparing a shareholders’ agreement has many benefits including:
An agreement provides certainty and predictability in situations which might otherwise result in time, money and effort wasting disputes or “management paralysis”.
Feel free to contact us any time to discuss shareholder agreement options for your clients at the start of their new business ventures.
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