Good leaver/bad leaver clauses set out terms of transfer of all or some of the shares of a departing director-shareholder to the remaining ones based on the reason for departure. If a founder is also employed as a director of the company, he or … [Continue reading]
Incorporating A Dividend Policy In Your Shareholder Agreement
Value can be extracted from a company in two ways: sale of the shares and distribution of dividends. The strategy that the shareholders agree is important for all owners. That might be to retain all profits, reinvest them, grow the business and … [Continue reading]
Planning In Case Of The Death Of A Shareholder
This may seem like a very morbid subject to bring up with the other founders when you are discussing terms in a shareholders agreement, but as the (paraphrased) saying goes “death and taxes are certain”. Unexpected death does happen, and as with … [Continue reading]
Why Investing With Sweat Equity Is Rarely Beneficial
Many projects are started between friends without a consideration of what each is putting into the business. The act of “starting”, of creating, is exciting Sometime later, when the founders can see that the business has legs, they decide to … [Continue reading]
Non-Compete Clauses In Shareholder Agreements
Many employment contracts contain non-compete clauses, which prevent an employee from leaving the company and either moving to a competitor or setting up themselves. The argument including these types of clauses is that an employee is likely to … [Continue reading]