Shareholders are an integral part of a business. They have voting rights that can help a company make beneficial decisions. It is crucial to understand how this business aspect works to avoid costly mistakes.
After signing a deal with the right shareholders, you should work collaboratively with them. Here are four tips that can help:
1. Have an agreement
Every shareholder joining your company should sign a contract. The agreement will detail their responsibilities, rights, power and share distribution, transfer of shares, compensation, deadlock provisions, non-compete clause and dispute resolution.
A clear agreement eliminates the chances of disputes in the future, and should one occur, you will have measures in place to solve it.
2. Invite everyone to meetings
Most shareholder disputes happen when one is left out of the company’s decisions. Thus, when you have a meeting, ensure that you invite everyone. State where and when the meeting will take place to avoid confusion.
You should also have grounds with which a shareholder can call for a meeting and the steps that will follow to ensure every party attends.
3. Respect all shareholders
In some companies, minority shareholders always feel like they are not respected. And this usually results in disputes. Therefore, it is essential to respect all shareholders regardless of the percentage of shares they own. Your company should have policies that protect the rights of both majority and minority shareholders.
4. Discourage personal interests
Shareholders should have the best interest of the company. However, some may fail to observe this duty by having personal interests that conflict with their status in the company. Thus, you should discourage conflict and interest in shareholders. It will be best to include ramifications of this in the contract.
Having disputes with the shareholders is expensive and takes your attention from running the business. If a dispute can’t be resolved internally, consider your options to protect your company.