When founders and/or investors come together for a common purpose they often establish a company to do this. In pursuing this common purpose and establishing the company the parties will have a set of assumptions around what that company will do, what it is capable of doing and what each of the shareholders might do. As part of our 'What's next' series, in this video and article, Simon and I discuss some of the considerations in relation to shareholders agreements.
It is important to not overlook that when a company is established another “legal person” is created and so in considering the relationships between the parties we should consider the roles of each shareholder and the company.
Any agreement between shareholders will deal with what happens on the way in (what contributions does each shareholder make), how does the company run once established (what is the role of the board and of each shareholder) and what happens on the way out (how does a shareholder exit, how can the business be sold or the company be wound up).
This article discusses the standard assumptions that may have been made by the Company and its shareholders under an existing shareholders agreement and and considers how those might change in the COVID-19 environment.