|Posted on 18 July, 2019 at 3:35|
Documents play an essential role in protecting the interests of the business and business owners over the course of a company’s lifetime.
Company Constitution - do you have shareholders other than yourself in the company? Do you want to retain the control of your company? Are you a shareholder or investor in a private company? Do you want to have ensure you have a say in how the business is run? If you answered yes to any of these questions you need a constitution for your company. Company constitutions enable a company to impose rules and obligations on incoming shareholders without separate agreements being required.
Shareholders Agreement / Partnership Agreement - a shareholders agreement outlines what each parties obligations are such as the introduction of capital and expertise. Other clauses sch as the amount of salary to be paid to working owners, dividend policy, and any other matters that form the overall agreement can be included.
Annual and Special Resolutions - Companies are required to prepare annual financial statements, it is important for shareholder and director resolutions to be prepared and signed off on an annual basis, accepting the financial statements, salary levels, and dividend policies. In addition major transactions should be accepted by special resolutions throughout the year. If the company is trading while insolvent it is important to consider the impact on directors and prepare a solvency resolution with shareholders agreeing to financially support the business operations.
Buy/Sell Agreement - the buy/sell agreement is a useful addition to a shareholder or partnership agreement when there is one party providing capital as a silent partner and the other partner wishes to eventually buy them out. The method of determining the share price should be outlined, together with the time-frame and process of calling the buy/sell option.
Employment Agreements - employment agreements should be drawn up for all employees including shareholder employees. Contractors should have agreements drawn up. Employment is a major area of risk for businesses and having the correct paperwork in place is essential.
Trade Terms - when carrying out work for a client a contract can help to determine the work that is to be included and how the customer is to make payment. Trade terms are important as a good trade credit policy ensures all costs associated with chasing a debt fall back on to the client. Where stock is involved ownership can be retained until payment is made in full.
Business Plan - Cashflow and Budget - before making a start in any business a plan should be drawn up, further a basic budget is always useful to plan for financing requirements and growth.