Drafting Shareholder Agreements
Drafting Shareholder & Partnership Agreements
Protect Your Rights and Interests With Proven Texas Business Lawyers
At Hendershot Cowart P.C., our Houston-based business attorneys have an established record of counseling and representing shareholders in a range of matters, including those involving shareholder disputes, oppression, shareholder derivative suits, and individual shareholder claims. While we provide responsive legal services to litigate claims, we also work with clients to mitigate the underlying issues behind those causes of action through the drafting of shareholder agreements.
Shareholder agreements are a means of addressing pivotal events and contingencies before they arise. By properly documenting shareholder (and partnership) rights and responsibilities, conflict can often be avoided or resolved in a cost-effective and minimally disruptive manner – preventing business disruptions, lost value and litigated disputes.
Critical components and potential areas of conflict we address in shareholder or partnership agreements include:
- A method to determine the value of shares in advance to prevent shareholder disputes
- Control and management agreements
- Ownership interests, which may include amount of initial contribution; structure of equity compensation, stock options, vesting options, and method of share valuation; and conditons by which company shares can be sold (i.e., right of first refusal).
- Roles of majority and minority shareholders in corporate decision-making and ongoing operations, duties and obligations, voting rights, authority to act, and other provisions
- Development of covenants not to compete (also known as non-competition clauses or non-compete agreements) with proven non-compete attorneys. Why? If one partner or shareholder is bought out under difficult circumstances, you take a risk not having a provision in the shareholder agreement for non-competition and/or non-solicitation. The partner or shareholder could turn around and begin competing directly against you.
- Measures to prevent minority shareholder oppression
- Options for removal of inactive or potentially harmful, divisive, and otherwise undesirable shareholder(s)
- Procedures to designate, replace, or remove directors or officers
- Protection and ownership of trade secrets and intellectual property, including client lists, formulas, business plans and more
- Rights and limitations
- An established procedure for dealing with buyout offers and events likely to impact ownership and control. This can include triggering events (such as a personal divorce, resignation, or retirement), the purchase price, how to determine the purchase price, and how the purchase price will be paid. The key here is that the process has been established before a problem arises, not after, which by then may be too late.
Trust the Team With 100+ Years of Combined Experience
Predicting specific problems and disputes while drafting partnership and shareholder agreements may be impossible, but protecting your interests through a shareholder agreement for issues that may arise is a sound legal decision well within reach. In today’s legal landscape, especially after the Texas Supreme Court struck down the shareholder oppression cause of action in Ritchie v. Rupe, shareholder agreements have also become increasingly essential for minority shareholders of closely held businesses.
As proven litigators well-versed in transactional and contract development, our firm has the foresight to structure and versatility to handle all paths to resolution, including arbitration, mediation, and assertion of claims or defense in court.
Our team at Hendershot Cowart P.C. proudly serves clients in Houston, throughout Texas and the U.S., and is available to discuss how we can guide partners and shareholders through the process of establishing, modifying, or challenging partnership and shareholder agreements and other business contracts. We also assist our clients involved in business disputes including breach of contract violations, breach of fiduciary duties, business fraud or other bad faith situations.
To discuss how we can help you protect your financial stake in a business or resolve a dispute, call 713-909-7323.
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“I cannot say enough good things about my Lawyer, Mr. David Augustus. His calm, laser-like knowledge of business law allowed me to prevail and teach a few others during the short negotiations. Having the full backing of his law firm also helped greatly.” - L.A.
“Excellent experience working with Ray to settle our partnership disillusion. He was consistently available and steadfast in his guidance. Highly recommend this firm.” - S.H.
“I retained Hendershot Cowart last year. Though an obvious small case for the firm, it was traumatic and very personal for me. Ashley Arnett guided me through the process, never once making me feel that my case wasn’t any less important as any other.” - S.L.