Do you have questions about a shareholder agreement? For example, what happens when one of the owners/shareholders wants to slow down? Or becomes occupationally disabled? Can they still keep their shares? Or do they need to be offered for sale? Who decides about the payment of dividend or sale of the business? The people running the business will have so many questions. Weller has the answers!
Drafting a shareholder agreement
When you’re starting up a new business, everyone is excited. But you need to remember that setting out the arrangements you’re making at this stage in a shareholder agreement is meant for the moment down the road when not everybody is seeing eye-to-eye. For example, when some of the predefined management targets are not achieved. Or when someone proves to be less of an asset to the organization than originally thought. It is important to think about the consequences of things like this, and agree on a good exit plan, right from the start. That might be a mandatory offer of shares in the event of dismissal in combination with ‘good/bad leaver’ clauses. Other aspects that you need to arrange in a shareholder agreement include authority with regard to certain important decisions and arrangements on a whole range of other subjects like dividend policy, noncompetition, etc.
Let us draft your shareholder agreement or tell you more about what a shareholder agreement involves.
What is a management bv
A management bv is a Dutch private limited liability company (besloten vennootschap) all the shares of which are held by the DMS. The management bv then signs a contract of services with another bv, which is where the actual business is placed. The DMS heads this other bv (the actual business) indirectly, through the management bv.
For these efforts, the management bv receives compensation in the form of a management fee. The amount of this fee and other arrangements on the management relationship are set out in a management agreement. The DMS becomes an employee of his/her own management bv and receives a portion of the management fee in the form of a salary.
Shareholder agreement checklist
To be sure that everyone is living up to the arrangements within the bv correctly, you need to put things down on paper. What are the components that will protect you from any unpleasant surprises?
- Document how the shares are to be handled and who holds which shares. Preserve your control over the shares in the company.
- To protect continuity, set out what happens when shareholders leave, when shares are sold, and in the event that you have to terminate cooperation with and/or dismiss a shareholder.
- How do you handle the sale of the company? Do minority shareholders have to sell when the major shareholder decides to do so? Or do they have the rights to tag along with the sale? This should be put down in a ‘drag along/tag along’ clause.
- Make good arrangements about important decisions, and set them down clearly in a way that is not subject to multiple interpretations.
- The arrangements made in the agreement will be confidential and not publicly available. Treat them as such.