Taking your business to the next level is a significant move that comes with several benefits, including more profits, reaching a new market and establishing your brand in the industry. Further, may attract the attention of prospective shareholders. When they purchase shares of the company’s stock, they will have voting rights, help make organizational decisions and will be subject to capital gains and dividend payments, among other rights and benefits.
While having shareholders is beneficial, disputes can arise, which can significantly affect the business. Here is how you can avoid unnecessary trouble:
1. Create binding agreements
You should have binding agreements with all your shareholders, The contracts should include their rights and roles and your duties as the business owner. Besides, use clear language in all clauses – vagueness may lead to misunderstandings. You should also include a conflict resolution clause to help you solve disputes before they get out of hand.
2. Treat minority and majority shareholders equally
The lack of respect between minority and majority shareholders is one of the leading causes of disputes. You can ensure this does not happen in your company using balance. For instance, both should be subjected to the same terms when they want to sell their shares.
In addition, minority shareholders should know their opinions matter. Conflict can arise when majority shareholders believe they have total control over the company’s decisions. You should contact all shareholders when they need to vote on a matter and make sure that their rights are respected.
Shareholder disputes can lead to expensive lawsuits. If you are in one, it may be time to get legal guidance to protect the business.