Do you need a Shareholders Agreement?
Going into business with someone can be a little like going into a marriage – it’s fine if it’s all going well, but if problems develop the “divorce” can be terribly acrimonious and terribly expensive!
If you are a shareholder in a private limited company, there are some very good reasons for having a Shareholders Agreement in place to set out the arrangements amongst the shareholders that aren’t otherwise dealt with in the Companies Acts. For instance, you may wish to make provision for a mechanism to manage the purchase of shares of a shareholder who wishes to leave the company or, worse still, to deal with a situation where a shareholder has died and you need to deal with her or her family members at what can be a very stressful and emotional time. If you do not have a Shareholders Agreement in place, there might be some difficulty in dealing with issues such as the valuation of the deceased or departing shareholder’s shares and the mechanism and timing of payment.
You may also find that it had been your preference, at the outset, to put up most of the money when the company started up resulting in your holding a majority of the shares with others who had a much smaller shareholding actually running the company. If, over time, you don’t like the way the company is being run, you have to rely on the Companies Acts to remove any Directors appointed by the minority shareholders and replace them with your own choices. Whilst this might be an effective way of replacing the Directors, you still have the minority shareholders who will, by now, undoubtedly be unhappy that they have been replaced. They don’t have to sell their shares to you and whilst they might not be in day to day control of the management of the company, they can certainly cause trouble and make life very unpleasant – and you don’t have a mechanism (other than to petition to have the company wound up) to buy them out for a properly assessed value. This means that they might try to hold you to ransom!
Let’s say you receive an offer to buy your shares, but that is conditional on the others in the company selling their shares to the buyer as well. If they don’t want to sell, then you might find that the buyer will not proceed with the purchase and your investment in the shares of the company is “locked in”.
On the other hand, you might be very happy working with your co-shareholder and/or Directors and your company might be very successful, but come unstuck when your co-shareholder wants to retire and sell his shares to realise his investment. You could find yourself with another person as your co-shareholder and potentially a co-director in the company or be left fighting with your one-time friend and co-shareholder about the buy-out value of his shareholding.
These are just some of the possible causes of dispute between shareholders in private limited companies and to avoid many of the pitfalls, it makes perfect sense to put a Shareholders Agreement into place to regulate the position of all shareholders in a fair and equitable way in the event of a dispute or death or disposal.
Arrange A Shareholder Agreement
If you would like to discuss a Shareholder Agreement or any other issues relating to the operation of your Company, please call us on 0141 887 5721 or click here to email us.
Cecilia Miller, Commercial Lawyer at Walker Laird
Today, our most recent recruit Cecilia Miller, gives us an insight into her experience in law and what she aims to achieve on joining Walker Laird.
I qualified as a lawyer over 20 years ago, and, since then, have spent my time specialising in commercial property, doing deals and giving advice to buyers, sellers, landlords, tenants, lenders and borrowers.
When Walker Laird offered me the opportunity to head up their commercial team, I was delighted to join this well established and trusted firm and to lead the already respected commercial department forward.
Commercial property comes in all shapes and sizes but I would like to think that there is very little during my practice that I haven’t come across whether in terms of legal challenges or types of property. I have had transactions involving fast food drive-thrus, sea-life centres, marinas and tram tracks as well as the usual shops, offices, restaurants and development land. Its variety that makes life interesting!
At the heart of it all is good, pragmatic, commercial advice and the aim to get the best deal for my clients.
I enjoy working alongside my clients, getting to know them and their business and find it rewarding when a transaction settles and everyone is happy with the outcome
I have worked for corporate law firms in Glasgow city centre and I am excited to bring that expertise and experience to Renfrewshire. With all the mergers and take overs in the large firms it’s becoming increasingly difficult to provide a personal, quality service at a cost-effective rate – that is what Walker Laird aim to do and I am delighted they’ve given me the chance to lead this department.
The team at Walker Laird are friendly and approachable and are very much client focused. They’ve made me feel welcome as I get to know the Paisley and Renfrew area and market and I’m looking forward to meeting and working with some of you who are reading this.
Get In Touch
Please contact me to discuss any needs you have in relation to any commercial property you have, or wish to have, an interest in. I am always pleased to chat through your requirements and how I can help.
To get in touch, call me on 0141 887 5271 or email me on cecilia.miller@walkerlaird.co.uk.
Business Rates and what you need to know about the 2017 revaluation
This year will see a revaluation of business rates. Revaluations like this happen every five years. The Scottish Assessors conduct a revaluation exercise to determine the rateable value of public and private non-domestic property. This revaluation was supposed to have taken place in 2015 but was postponed until this year.
Will you be affected by the revaluation?
Even small changes to your rateable value could affect your eligibility for or disqualify you from rate relief so it is important to find out if the rateable value of your property has gone up or down relative to the national average. Businesses in an area or in a sector doing well should expect their rateable values to increase and firms in less successful areas should expect a decrease.
What to do if you think you have been valued incorrectly?
You could have grounds to appeal if you believe that your value is incorrect. If you think this is the case, you should contact your local Assessor to discuss this. However, you may require professional assistance from your solicitor or other property professional. Formal appeals against revised valuations can only be made between 1 April 2017 and 30 September 2017. Councils can grant discretionary relief to businesses in the local area although only in exceptional circumstances. Other reliefs and assistance may be available to small businesses including Rural Relief and Enterprise Zone Relief but again only in special circumstances. You can find out more information about this help here.
You can check the current rateable value of your non-domestic property at The Scottish Assessor Association’s website.
Walker Laird At The Business Lunch
We are delighted to be attending The Prince and Princess of Wales Hospice Business Lunch this Friday, an annual and much-anticipated event on the Scottish Business calendar.
The Glasgow City Chambers will host an afternoon of both business and pleasure, with the opportunity to meet others and network while supporting Glasgow’s hospice.
Chartered Accountants, Campbell Dallas are enthusiastic supporters of the hospice and have been for 16 years. This year, they return as the main sponsor for the event.
Guests And Supporters
The work of the hospice focuses on providing the best quality of life for those living with life-limiting illnesses and offering support for their families, whether that be at home, in hospital or in the hospice itself. As a business, we are proud to support the hospice and look forward to an afternoon of celebrating the work that they do.
Each year, the lunch hosts a guest speaker and we are excited to hear from this year’s speaker, The Rt Hon Brian Wilson, Executive Chairman of Harris Tweed Hebrides, followed by what we are sure will be an exceptional meal.