If you`re a property developer, you know that it`s a complex business that involves a lot of moving parts. One aspect that`s often overlooked is the importance of having a shareholders agreement in place. In this article, we`ll be discussing what exactly a shareholders agreement is, why property developers need one, and what should be included in it.
What is a Shareholders Agreement?
A shareholders agreement is a legal document that outlines the rights and obligations of shareholders in a company. It provides a framework for the way in which the company is run and how decisions are made. Essentially, a shareholders agreement is a tool that helps protect the interests of all parties involved in the business.
Why Do Property Developers Need a Shareholders Agreement?
As a property developer, you may be working with other investors, contractors, and stakeholders in your business. Having a shareholders agreement in place can help ensure that everyone is on the same page when it comes to decision-making, profit distribution, and more. It can also help protect your interests and investments in the company.
What Should Be Included in a Shareholders Agreement for Property Developers?
When drafting a shareholders agreement for a property development company, there are several key elements that should be included. These include:
1. Decision-making processes: This section should outline how decisions will be made within the company, including what types of decisions require a consensus and how disputes will be resolved.
2. Profit distribution: Property developers should establish how profits will be shared amongst shareholders.
3. Roles and responsibilities: This section should outline the roles and responsibilities of each shareholder in the business. It should also explain how new shareholders can be added and how old shareholders can be removed.
4. Exit strategy: It`s important to include an exit strategy in your shareholders agreement. This ensures that all parties understand what will happen if someone wants to leave the company or if the company needs to be dissolved.
5. Non-compete clauses: To protect your interests as a property developer, it`s important to include non-compete clauses in your shareholders agreement. This prevents shareholders from starting or investing in a competing business.
In conclusion, property developers should consider drafting a shareholders agreement to protect their interests and investments in the business. It`s important to have a legal document in place that outlines the roles, responsibilities, and decision-making processes for all parties involved. By including these key elements in your shareholders agreement, you can help ensure the success and longevity of your property development company.