The importance of Shareholders’ Agreements

Many of our clients are immensely passionate about their business, have invested their life’s savings and have years of experience within their respective industries. Frequently, their business relationships with various stakeholders evolve as they form crucial business partnerships or joint ventures with complementary businesses. When parties come together in such instances, we usually insist that our clients enter into Shareholders’ Agreements (or Unit Holders’ Agreements as the case may be depending on the business structure) and a Share Sale Deed. It is important that parties are very clear on what each party brings to the table, the way each of them values of the business, and their respective view on the business’ future direction. We advise on these frequently and we understand our client’s needs in a practical manner.

At the other end of the spectrum however, we have clients who no longer see eye-to-eye with their business partners. Their position may be further complicated if a Shareholders’ Agreement was not entered  into at the outset. Such irreconcilable differences, not only affects their passion for their business and life’s work, it also affects their business’ profitability and the relationship with their clients and ultimately the goodwill of the business. In such situations, we usually attempt to understand the business’ financial position and the nature of the disagreements between parties, among other things. We generally advise clients to attempt mediation in an attempt to separate the business and for parties to part ways in an amicable a fashion as possible. This is usually the more cost effective option but it is very much dependent on the circumstances of each case. Having an independent neutral third party should not be underestimated. Dispute among business partners and shareholders is not uncommon and we help our clients to navigate through the murky waters of mediation and the court process, during a somewhat stressful time.

Vik Pillay
Senior Associate (Admitted in Australia, Singapore and England & Wales)

2021-05-05T01:07:19+00:00May 4th, 2021|Business Advice, Business Partnerships, Contracts, Corporate Advisory, Dispute Resolution|Comments Off on The importance of Shareholders’ Agreements