Why have partnership/ shareholder agreements?

partnership shareholder agreements reached with handshake between an adviser and a businesspersonPartnership/ shareholder agreements provide a level of comfort and confidence to co-owners; and to other stakeholders in a business. When businesses are being established, owners usually undertake extensive research and due diligence processes to satisfy themselves that the investment (of time, energy, emotion and finances) is going to achieve nominated outcomes. This is all part of business planning: it can be argued that the agreements reached in the planning phase should be documented to record the matters considered and agreed.

Business succession – and continuity!

One important aspect of business planning is to ensure that business succession arrangements are in place to deal with risks to the business continuity in the face of particular events. One of the events of concern is that related to the key people/ entities in the business: the owners. Owners in the business should establish between themselves what their respective roles are in the business – and their responsibilities to each other, both in the ongoing operation of the business and in the event that there is a significant event arise that interferes with the effective performance of any one of the owners.

Family financial independence.

To this end, all business owners who are in a multi-family business relationship are encouraged to seek professional advice and enter into partnership/ shareholder agreements for their own – and ultimately, their family’s – peace of mind and financial security.

Incorporating Buy-Sell arrangements into the documented ‘partnership’ agreement will ensure financial independence for survivor family members – and structured estate planning will enable this status.

What to do now…

Whilst the drafting of the relevant documents is the role of legal advisers, the experienced advisers at Continuum Financial Planners Pty Ltd can assist you with the preparation of information and data that will be of assistance to the lawyers – and save you costs with them. If you are in a business relationship (either directly or through family entities) and have yet to document such an agreement, call our office on 07-34213456, or use our website facility to Contact Us for advice on how to progress this important aspect of your business structure: our advisers work to the mantra that – ‘we listen, we understand; and we have solutions’ that we deliver through personalised, professional wealth management advice.

We thank Cornwalls Law + More (formerly McKays Law, Brisbane) for allowing us to base our article on this topic on material found in their website.
(Originally posted in January 2010, this information has been updated as at April, 2019.)