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June 25, 2012 at 1:53 am #1108852
paranda
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Kennethti, post: 121098 wrote:
Hello Paranda,

It sounds like you do need to speak with a lawyer and an accountant in relation to these matters. Generally share proportions are sorted out between the parties. You are correct in that a company can issue out different classes of shares, to deal with voting power and receiving dividends.

When putting together the entity you should put together a shareholder’s agreement. This agreement should cover:

  1. The initial division of shares in the company, and who holds those shares.
  2. What each shareholder brings to the table.
  3. What happens if the company requires additional capital.
  4. Meetings of the shareholders.
  5. The rights attached to the different class of shares.
  6. The rights of the shareholders to appoint directors of the company – whether these are voted on, or each shareholder can appoint a director, etc.
  7. What happens to the shares in case a shareholder becomes incapacitated, bankrupt, or passes away.
  8. Mechanisms in case a shareholder wants to leave the business, including any first rights of refusal.
  9. Changes in the constitution.
  10. Any restraint of trade.

When putting together the entity you should also put together a company constitution. The constitution should replace the standard constitution and should cover:

  1. Meetings of the directors.
  2. Voting of the directors, including any situation where there is a deadlock in voting.
  3. What situations require a unanimous vote of the directors.
  4. Who is authorised to operate bank accounts.
  5. When dividends should be distributed.

Again, it is best that you see both a lawyer and accountant about putting these together.

I write a business blog as well – you can see it at http://www.business-lawyer.com.au. If you do need any help with this, give us a call and we can sort out what your requirements are.

Thank you Very much Kenneth.
This is exactly what I was looking for.
I realise I need to see an accountant & lawyer, but I prefer to go with as much information as I can so to make the most of the meeting.
Will take a look at your blog – thanks.
Paranda.