Every business owner in business with someone else should have mechanisms in place to ensure that their fellow shareholder/business partner does not go off on a frolic of their own, making inappropriate decisions or acting beyond the parameters on matters on which you ‘thought’ you had an understanding.
You will know that it matters not how well how well you get on now, how well the business was operated in the past, how in tune you are with your fellow business partner or even whether you’re related – life events can and, more often than not, do happen.
What checks do you have in place to stop your fellow business owner/shareholder from:
• incurring unnecessary or excessive expense for the business?
• incurring debt for the business?
• taking on employees or appointing them on what you might consider excessively high salaries?
• selling significant assets of the company?
• entering into contracts that do not arise in the ordinary course of the business
• entering into a contract of significant value without your input?
• allowing the business to lend money?
I could go on …
Above are just some of the day-to-day events that occur, see my article at Shareholders Agreements to find out about life-events that are likely to occur during the course of a business and how to protect yourself and your family.