As investors, shareholders have an interest in protecting their rights and ensuring that the company is well-managed and operated. It’s also equally important for there to be a clear contract between the entity and its investors. Therefore, if you are setting up a Florida company, it’s crucial that you know how to draft a shareholder agreement:
What is a Florida Shareholder Agreement?
A shareholder agreement is a legally binding contract between a company and its investors.
The shareholder agreement will generally include:
- shareholder rights and obligations,
- dispute resolution details,
- business management, and
- financial information.
For a business owner, it’s imperative to have a shareholder agreement that clearly defines shareholder rights and your company processes.
Voting and Operational Agreements
There are two types of Florida shareholder agreements: Voting and Operational.
Voting Agreements
- Florida law provides that two or more shareholders may provide for the manner in which they will vote their shares by signing an agreement for that purpose.
Operational Agreements
- Operational agreements concern how the business will function. This document will state shareholder rights and responsibilities and provide details regarding business operations.
Drafting a Shareholder Agreement
Your Florida shareholder agreement will contain important terms that can have a long-term impact on your business and its future.
The good news is that there are some steps you can take while preparing to draft a shareholder agreement that may help you later on.
Establishing Expectations
- Often, owners and shareholders enter into their relationship with certain ideas and expectations about how the business will operate and investment returns. Taking the time to determine your shared vision of the entity’s future can help you develop mutually agreeable terms.
Considering Terms
- You will also want to discuss the terms you expect to include in your shareholder agreement and ensure that both sides have similar viewpoints.
Dispute Resolution
- Another matter to consider is how you plan to resolve disputes. Do the parties want to submit to binding arbitration if there is a conflict? Thinking about how you intend to resolve disputes ahead of time can save you time, money, and frustration down the road.
What Should be Included in My Florida Shareholder Agreement?
Your Florida shareholder agreement should include terms that clarify the details of your business’s relationship with its investors and the shareholder responsibilities. One of the most important aspects of this agreement will involve the shareholders’ financial responsibilities to the business. Therefore, you want to use clear language to establish what funds or other assets the shareholder will contribute to the business.
Your business’s shareholders will have voting power and the authority to take certain actions. Therefore, the agreement should include details regarding what they can and cannot vote upon and their internal leadership structure. Additionally, your agreement should establish how a member can be removed or appointed. Many Florida shareholder agreements also include provisions regarding the sale or transfer of shares in the company.
Your Florida shareholder agreement is a foundational document that should be carefully drafted to protect your business interests. If you are establishing a Florida company and need a shareholder agreement, it’s important that you work with an experienced Florida business attorney. You and your business lawyer can discuss your goals for your venture and determine the best terms to include in your Florida shareholder agreement.
Contact an Experienced Florida Business Lawyer
Attorney Richard Sierra at the Florida Small Business Center assists clients like you with commercial leasing, business, and litigation matters. As always, Our Goal Is to Help You Succeed™. For an appointment, you may call us at 1-866-842-5202 or use the contact form on our website. We represent clients throughout the State of Florida, including Coral Springs, Coconut Creek, Boca Raton, Delray Beach, Pompano Beach, Sunrise, Fort Lauderdale, Miami, West Palm Beach, Jupiter, Deerfield Beach, Stuart, Port St. Lucie, Orlando, Naples, Fort Myers, Sarasota, Tampa, and surrounding communities.