START-UP ADVICE

MAKE IT
START UP
IMPORTANCE OF A
BUSINESS PRE-NUP
Henry Catchpole from online company records management
software business Inform Direct looks at how to safeguard both
your shares and your relationships.
Picture the scene: You are setting up a brand new
company with your family or friends as business
partners. It’s an exciting time and you have big
dreams and a shared vision for the future. But
what happens if things go wrong? If the personal
circumstances of the shareholders change? If
relationships break down? How can you protect
yourself and your company from the fall out?
A shareholders’ agreement as the business
version of a marital pre-nup.
It defines what happens if people want to go
different ways. It is a safeguard which gives you
and your fellow shareholders a set of terms to
prevent complications further down the line,
protecting the enterprise itself as well as your
own investment.
So how does it work?
The purpose is to protect the shareholders’
investment in the company, establish a fair
relationship between them and govern how the
company is run.
An agreement will:
​set out rights and obligations;
​regulate the sale of shares in the company;
​describe how the company is going to be run;
​provide an element of protection for minority
shareholders
​define how important decisions are to be made.
What should you include in your agreement?
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