- Total posts: 20
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:
- The initial division of shares in the company, and who holds those shares.
- What each shareholder brings to the table.
- What happens if the company requires additional capital.
- Meetings of the shareholders.
- The rights attached to the different class of shares.
- The rights of the shareholders to appoint directors of the company – whether these are voted on, or each shareholder can appoint a director, etc.
- What happens to the shares in case a shareholder becomes incapacitated, bankrupt, or passes away.
- Mechanisms in case a shareholder wants to leave the business, including any first rights of refusal.
- Changes in the constitution.
- 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:
- Meetings of the directors.
- Voting of the directors, including any situation where there is a deadlock in voting.
- What situations require a unanimous vote of the directors.
- Who is authorised to operate bank accounts.
- 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.