Shareholder agreements are essential to the proper formation of a corporation. This agreement can outline who the shareholders are, what their rights and obligations are after the formation of the company, and what to do if it becomes necessary to remove a shareholder.
A Minnesota shareholder agreements lawyer could help you draft and execute a contract. Throughout the process, a detail-oriented business lawyer can work with you to create an agreement that meets your unique goals.
What is a Shareholder Agreement?
Not only do stockholders contribute money to finance the start of a company, but they also retain legal rights and obligations towards the company. However, these rights and duties are not always uniform.
It is essential to be able to hold shareholders to their obligations, as well as to understand their rights in case of conflict. The best way to do this is to draft and execute a shareholder agreement. This is a legally binding contract that names each shareholder, outlines their roles within the company, and states in what their duties are concerning the company’s day to day activities.
A typical shareholder agreement will contain information that includes:
- The management of the business
- The election of officers or directors
- The financial stake of each party in the company
- The declaration of any payment of profits
In short, a shareholder agreement provides the information that governs how the company must be run. Additionally, the agreement can outline methods for removing shareholders and what is to be done if the business comes to an end. A Bloomington shareholder agreements lawyer could help to provide more information about these agreements and why they are essential to proper business formation.
Enforcing a Minnesota Agreement in Court
Not only are shareholder agreements vital to the day to day operations of a company, but they are also legally binding documents in case of disputes between shareholders. Situations may arise where a group of shareholders wishes to force another out of the company, or one person is not performing their required duties. In these cases, a group of shareholders may bring a claim to civil court.
MN Statute 302A.457 says an agreement is enforceable in court if all parties sign it at the time it becomes valid. Additionally, the agreement is only valid if it is filed within the corporation and if a disclosure of its existence is present on any stock certificates. Finally, a copy of the agreement must be made available to any shareholder who requests it.
The statute also empowers any party in the contract to demand enforcement in court. Specifically, a shareholder may sue the other holders for a breach of the agreement. They can demand payment of profits, a proper voting right in any shareholder meeting, or the enforcement any other term of the agreement.
Consult a Bloomington Shareholder Agreements Attorney
A shareholder agreement that clearly specifies the rights and obligations of all parties can be essential. Not only are these agreements enforceable within the company itself, but they also carry legal weight. Any party to an agreement can ask a court to intervene to help them exercise their rights. A Minnesota shareholder agreements lawyer could work to draft and execute an agreement that meets your needs. Call today to discuss your goals.