Delaware Shareholder Agreement: What You Need to Know
If you are starting a business or investing in one, you may want to consider forming it as a Delaware corporation. Delaware is known for its business-friendly laws and has become a popular choice for businesses of all sizes. One of the key documents you’ll need to have in place as a Delaware corporation is a shareholder agreement.
A shareholder agreement outlines the relationship between the corporation and its shareholders. It is a private agreement between the shareholders and does not need to be filed with the state. However, it is an important document as it sets the rules and guidelines for how the corporation will be managed and how decisions will be made.
Some of the key provisions that are typically included in a Delaware shareholder agreement include:
1. Management of the Corporation: The shareholder agreement will outline how the corporation will be managed, including who will serve on the board of directors and who will be responsible for day-to-day operations.
2. Shares and Stock Options: The agreement will specify the number of shares each shareholder owns and how those shares can be bought or sold. It may also include provisions for stock options or other equity incentives.
3. Transfers and Restrictions: The shareholder agreement may include restrictions on the transfer of shares to third parties. This is to prevent unwanted shareholders from gaining control of the corporation.
4. Voting Rights: The agreement will specify how voting rights will be allocated among the shareholders. This includes voting on major decisions such as mergers and acquisitions.
5. Dispute Resolution: The shareholder agreement may include provisions for how disputes between shareholders will be resolved. This could include mediation or arbitration.
It is important to have a Delaware shareholder agreement in place, as it can help prevent misunderstandings and disputes between shareholders. It is also a useful tool for attracting investors, as it provides a clear framework for how the corporation will be managed and how decisions will be made.
If you are considering forming a Delaware corporation or investing in one, it is important to work with an experienced attorney who can help you draft a shareholder agreement that meets your needs. With the right agreement in place, you can protect your investment and ensure the long-term success of the corporation.
