Shareholders, LLC, Partnership, & Board of Directors Agreement Templates
A new business formation generally requires a few key agreements:
One of the important benefits of a shareholders’ agreement is that it sets forth the ground rules for the operation of a business in advance, so that everyone knows his or her rights and obligations. A shareholders’ agreement will often recite the share ownership and include an agreement as to who will be the directors and officers of the corporation. An important aspect of a shareholders’ agreement is to limit the ability of shareholders to sell their shares. Successful closely held businesses are generally those that don’t permit strangers to come into the business by buying existing shares.
A typical provision would require that anyone who receives an offer to buy shares of the business must relay the offer to the other shareholders, who will have the right to match the offer. If the offer is not matched, the shareholder is free to sell to the outside buyer. Stricter shareholders’ agreements will prohibit any outside sales, requiring instead that any shareholder who wishes to sell must do so to the existing shareholders, at a price that is often set forth (explicitly or by formula) in the shareholders’ agreement. But this could be considered as too oppressive a provision. You can use our proven shareholders agreement template to develop a proven agreement.
Limited Liability Company (LLC) & Partnership Agreements
An LLC operating agreement is an agreement among limited liability company members governing the LLC’s business, and members’ financial and managerial rights and duties. Many states in the United States require an LLC to have an operating agreement. LLCs operating without an operating agreement are governed by the state’s default rules contained in the relevant statute and developed through state court decisions.
An operating agreement is similar in function to corporate by-laws, or analogous to a partnership agreement in multi-member LLCs. In single-member LLCs, an operating agreement is a declaration of the structure that the member has chosen for the company and sometimes used to prove in court that the LLC structure is separate from that of the individual owner and thus necessary so that the owner has documentation to prove that he or she is indeed separate from the entity itself. LLC agreement templates are commonly used to develop the operating agreement.
Articles of partnership is a voluntary contract between/among two or more persons to place their capital, labor, and skills into business, with the understanding that there will be a sharing of the profits and losses between/among partners. Outside of North America, it is normally referred to simply as a partnership agreement.
A partnership agreement is the written and legal agreement between/among business partners. When an attorney is not in place, it is always recommended to use a good partnership agreement template to develop the agreement.
Board of Directors Agreements
The process for running a board, sometimes called the board process, includes the selection of board members, the setting of clear board objectives, the dissemination of documents or board package to the board members, the collaborative creation of an agenda for the meeting, the creation and follow-up of assigned action items, and the assessment of the board process through standardized assessments of board members, owners, and CEOs.