If your company is young, it may not be easy to come up with a few thousand dollars to pay a lawyer to draft a shareholder agreement. Even simple agreements can cost $1,000 to $2,000, while more complex contracts can even go up to $10,000.
Hiring a lawyer to draft a shareholders agreement will cost a corporation money because it requires the time and expertise of a corporate lawyer to complete the task. ContractsCounsel’s marketplace data shows the average shareholders agreement drafting costs to be $1,300 across all states.
Need advice on a Shareholders’ Agreement? Our fees for preparing and drafting a shareholders’ agreement start at £1,250 plus VAT. A Shareholders’ Agreement helps protect the legal rights of all shareholders in a business and aims to ensure everyone is treated fairly.
We believe that it is quite possible to draw it yourself, provided that you use a good template as a basis (such as our own). The difficulty in drawing an agreement is not the legal wording but in considering the issues that the shareholders will face, and deciding what should happen in each scenario.
There is an initial entrance fee just to get in the game. In order to even be eligible to formally submit a shareholder resolution, an investor must own more than $2,000 in stock (with voting privileges) or 1% of the company (the 1% figure can be valued at less than $2,000) to submit a proposal.
There is no legal requirement for a limited company to have a Shareholders Agreement, but I strongly recommend every limited company to have one, even if it is just you and your spouse (and perhaps more so!) A Shareholders Agreement governs and regulates the relationship between shareholders.
How much does it cost to write a purchase agreement?
Contract drafting costs range between $200 and $800 for a simple contract and $1,000 and $5,000 for a complex contract. Contract attorneys can offer hourly or flat fee contract drafting services.
What should be included in a shareholders’ agreement?
- Issuing shares and transferring shares – including provisions to prevent unwanted third parties acquiring shares, what happens to shares on the death of a shareholder and how a shareholder can sell shares.
- Including any tag along or drag along provisions.
Obviously, the legal fees paid, which following their transfer for tax purposes to the director/shareholders, will indeed be allowable expenses on their individual capital gains tax computations.
A shareholders’ agreement is an agreement entered into between all or some of the shareholders in a company. It regulates the relationship between the shareholders, the management of the company, ownership of the shares and the protection of the shareholders. They also govern the way in which the company is run.
When to put an agreement in place
the company is formed. a shareholder dies or sells his shares or wants to do so soon. shares are issued to a new shareholder. one shareholder’s holding is divided amongst many others (for example, if a shareholder dies and leaves the shares to his children)
The appointment of directors and quorum requirements, determining the matters requiring special resolution or providing veto rights to certain shareholders, financial needs of the company, restrictions on right to transfer shares freely, defining the obligation of each of the shareholder towards the company.
A shareholders’ agreement is a legally enforceable contract and the rules on its enforceability, and the remedies available in the event of a breach, will in many cases be the normal rules of contract law.
Understanding Shareholders
A single shareholder who owns and controls more than 50% of a company’s outstanding shares is a majority shareholder. In comparison, those who hold less than 50% of a company’s stock are classified as minority shareholders.
Profits made by limited by shares companies are often distributed to their members (shareholders) in the form of cash dividend payments. Dividends are issued to all members whose shares provide dividend rights, which most do.
How much does it cost to be incorporated?
Costs to Incorporate with the Standard Package
| State Click on State name to learn more | C Corp Package | LLC Package |
|---|---|---|
| Alabama | $ 795 | $ 795 |
| Arkansas | $ 480 | $ 480 |
| Arizona | $ 570 | $ 560 |
| California | $1150 | $1180 |