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Shareholder-Investor Agreements

Shareholder Agreement Attorneys in San Francisco Bay Area, California

In a corporation, ownership of the company is vested on the shareholders, while management and operations are delegated to the company’s board of directors and officers. While officers are the ones typically involved in a company’s day-to-day operations, shareholders are no mere gallery of consent to the activities of the company. In fact, certain powers are specifically reserved for shareholders instead of the company’s directors.

The law governing corporations may vary from state to state. Some states may have lenient laws to encourage businesses into incorporating in their jurisdiction. In Florida, for instance, if a company’s shareholders are 100 or fewer, a shareholder agreement is considered effective among the shareholders, even if any provision is inconsistent with the Florida Business Corporation Act. The Zurada Law Group’s shareholder attorneys in San Francisco, California are knowledgeable and well-experienced in researching the varying state laws on corporations and in drafting Shareholder Agreements that will suit a particular company’s needs.

Shareholder Agreement Lawyers in San Francisco California

While a corporation’s by-laws typically contain procedural rules in running a company, a Shareholder Agreement deals with more substantive issues of the company, such as stock transfer, and may include provisions on powers specifically reserved for shareholders. It may also place restrictions on certain actions by the company’s officers, which may be subject to a shareholders’ vote. If there are any inconsistencies between the by-laws and the shareholder agreement, the latter typically prevails.

One of the main purposes of a Shareholder Agreement is to restrict stock transfers in a manner that will dilute existing shareholders’ ownership percentage of the company. While a Shareholder Agreement may lay out general policies regarding stock transfer, it may also uphold shareholders’ preemptive rights regarding stock ownership. These preemptive rights allow existing shareholders the option of buying shares of a withdrawing shareholder proportionate to his ownership percentage of the company, before the shares are offered for sale to outside investors. A Shareholder Agreement may also provide guidelines on how stock transfer is to be made in case of triggering events such as disability, retirement or death of a shareholder, as well as proposed sale of stock by any shareholder to third party investors.

Shareholder Agreements may be complex, yet they provide rules that may determine the fate of the company’s ownership. The Zurada Law Group’s share holder agreement attorneys in San Francisco will help companies simplify the complexities of Corporations statutes that vary from state to state and draft Shareholder Agreements in the best interest of shareholders.

For a FREE initial consultation, you may contact the firm’s attorneys in San Francisco, California at 415-637-8483 or fill up the Free Consultation form on this website.

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