Business Structures & Shareholder Agreements
How a business is structured matters
The legal structure through which a business operates can affect ownership, control, decision-making, liability and what happens when circumstances change.
Equally important are the arrangements between the people who own and operate the business.
When a business is starting, relationships are often positive and everyone is focused on making the venture succeed. That is also the best time to discuss how important decisions will be made, what each person expects from the arrangement and what should happen if those expectations or circumstances change.
At Watt & Severin, we assist business owners with establishing and documenting business structures and the agreements that govern relationships between owners.
How can we help?
Business Structures
Considering the legal structure through which a business will operate.
Shareholder Agreements
Establishing the rights, responsibilities and expectations of shareholders.
Changes in Ownership
Documenting the entry or departure of an owner and changes to existing arrangements.
When Business Relationships Change
Advice when disagreement or unexpected circumstances affect the relationship between business owners.
Business Structures
Start with what the business needs to achieve
There is no single business structure that is right for every business.
A business may operate through a company, partnership, trust, individual ownership or a combination of structures.
The appropriate arrangement depends upon the people involved, the nature of the business and what the owners are trying to achieve.
Legal structure can affect matters including:
ownership and control;
decision-making;
liability;
the introduction of new owners or investors;
the transfer or sale of interests;
succession and what happens if an owner leaves;
the ability to sell the business in the future; and
the legal relationships between the people involved.
Taxation and financial considerations are also important when choosing or changing a business structure.
For that reason, business structuring is often best approached collaboratively with your accountant or taxation adviser.
We can advise on the legal aspects of the proposed structure and work with your other professional advisers so that the arrangements are considered as a whole.
Starting or restructuring a business? Talk to Watt & Severin about the legal arrangements.
Changes in Ownership
Businesses do not remain static
An owner may want to leave. A new investor may join. Existing owners may change their respective interests. Shares or other business interests may be transferred as part of a broader transaction.
Those changes can affect more than the ownership register.
Existing agreements may need to be reviewed, new documentation may be required and the consequences for the remaining owners and the business should be considered.
We can assist with documenting changes in business ownership and reviewing the arrangements that will apply after the change.
Where taxation, valuation or financial advice is required, we can work alongside the relevant professional advisers.
When Business Relationships Change
Deal with the legal position before the disagreement defines it
Business relationships can change.
Owners may disagree about the direction of the business, the contribution being made by each person, financial decisions, distributions, management or whether someone should remain involved.
Sometimes the governing documents provide a clear process. Sometimes they do not.
When an issue arises, the starting point is to understand the legal arrangements already in place.
That may involve reviewing the company constitution, shareholder agreement, partnership agreement, trust documentation, company records or other agreements between the parties.
We can help you understand your legal position, the mechanisms available under the existing arrangements and the options for moving forward.
Where there is an opportunity to resolve the issue commercially, we can help explore it before positions become unnecessarily entrenched.
Business succession deserves consideration too
Ownership arrangements should not only contemplate voluntary changes.
Death, incapacity and other unexpected events can have significant consequences for a privately owned business.
A shareholder agreement or other business-owner arrangement may therefore need to work alongside the owners' estate planning and succession arrangements.
Where these issues are relevant, we can help identify the connection and consider whether advice is also required in relation to wills, enduring powers of attorney or broader estate planning.
Put the framework in place before you need it
Good business relationships are valuable.
Clear legal arrangements help protect them by making expectations, responsibilities and processes easier to understand.
Whether you are starting a business with someone else, reviewing an existing structure or dealing with a change in ownership, involving us early gives you an opportunity to put appropriate arrangements in place before an issue arises.
Talk to Watt & Severin about your business structure or ownership arrangements.