When a Florida corporation is established, its shareholders will become its owners. Therefore, shareholders have certain rights and responsibilities concerning the corporate entity. In this case, a shareholder agreement can help the parties understand their rights and obligations and avoid conflicts. If you are unfamiliar with this term, you will want to know what is a Florida shareholder agreement?
What is a Florida Shareholder Agreement?
A Florida shareholder agreement is the document that sets out:
- how the business will operate and
- identify the shareholders’ rights and responsibilities.
As with any legal relationship, you will want your shareholder agreement to be a carefully drafted document that creates a clearly defined set of expectations.
What Kinds of Terms Should be Included in a Shareholder Agreement?
Florida shareholder agreement requirements and conditions can vary according to the industry and particular needs of the corporation. However, some terms should be present in most contracts.
Aside from operational details, Florida shareholder agreements should include information regarding:
- Shareholder obligations
- Share transfers
- Shareholder rights
- The corporation’s finances
- Shareholder conflict of interest
- Dispute resolution information
The shareholder agreement is, in essence, a contract between the corporate entity and its owners (shareholders). There are two types of shareholder agreements in Florida: 1) a voting agreement and 2) an operating agreement.
Shareholder Voting Agreements
Florida law provides that two or more shareholders may agree on how they will vote their shares. When properly created, a shareholder voting agreement is specifically enforceable and can be transferable.
Shareholder Operational Agreements
Florida law also provides that shareholders may enter into operational agreements. These contracts detail how the business will function, the shareholder’s and the company’s respective rights and responsibilities.
Shareholders may enter into an agreement that:
- Eliminates the board of directors or restrict its powers;
- Identifies and establishes the board of directors’ or officers’ authority and powers;
- States board member terms and how they may be elected and removed;
- Governs the authorization of making distributions;
- Governs the exercise or division of voting power by the shareholders and directors or among any of them;
- Establishes the terms and conditions for transferring or using property or the provision of services between the corporation and any shareholder, director, officer, or employee of the corporation or among any of them;
- Transfers the authority of a shareholder or other to exercise the corporate powers or to manage the business and affairs of the corporation, including directors or shareholders deadlock resolution;
- Requires dissolution of the corporation at the request of one or more of the shareholders or upon the occurrence of a specified event or contingency;
- Imposes liability on a shareholder for the attorney fees or expenses of the corporation or any other party in connection with an internal corporate claim;
- Establishes, including in lieu of a judicial dissolution, a mechanism for breaking a deadlock among the directors or shareholders of the corporation; and
- Otherwise governs the exercise of the corporate powers or the management of the business and affairs of the corporation or the relationship between the shareholders, the directors, and the corporation, or among any of them, and is not contrary to public policy.
Shareholder agreements must be:
- set forth or referenced in the articles of incorporation or bylaws and
- approved by all persons who are shareholders at the time of the agreement; or
- “Set forth in a written agreement that is signed by all persons who are shareholders at the time of the agreement and such written agreement is made known to the corporation;” and “Subject to termination or amendment only by all persons who are shareholders at the time of the termination or amendment, unless the agreement provides otherwise.”
There are several factors to consider when developing your Florida shareholder agreement, and the terms must address your operational realities and future needs. Therefore, having the advice of an experienced Florida business attorney when developing your shareholder agreement is essential. Your lawyer can help you evaluate your business’s operational needs today and in the future.
Contact a Florida Business Attorney Today
Attorney Richard Sierra at the Florida Small Business Center assists clients like you with 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 small business 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.