What is a shareholders’ agreement?

Some common situations that most shareholder agreements try to address are:

  • What happens if a shareholder dies or becomes disabled, or gets divorced?
  • What happens if the shareholders aren’t getting along?
  • What happens if a shareholder wants to sell their shares to a third party?
  • How is the company going to distribute dividends, or make distributions, to the shareholders?

You may have a mutual understanding of how to address those issues, but it should be written out in a shareholders’ agreement to make it binding.