“An ounce of prevention is worth a pound of cure”

When you enter in a business with another person, you do not expect that your business will break down because of a dispute. However, in a corporate environment which involves shareholders and more than one partner, just like in a marriage, everything is possible - your partner(s) might get injured, divorced, or may die. This is why, in order to reduce the negative outcome of a possible business break-up in a future, it is crucially important to be legally prepared for any stressful situation that can arise between you and your business partner(s).

First of all, surround yourself with a team of professionals, such as accountants, financial advisors, marketing experts, and, of course, good lawyers. Before starting incorporating your business, get the lawyer’s help in drafting an agreement between yourself and your partners and other shareholders to establish a model on how you want to work together. The agreement should also stipulate the situation when an additional partner or party enters the business. When you have such a contract that structures all sides of your corporate business, foresees any possible changes and provides ready mechanisms of dispute solving, your business is safe and insured from any risks.

In many States of the United States and some Provinces of Canada the majority of companies are incorporated under the Business Corporations Act, or BCA, which sets minimum obligations for the officers and shareholders. Unfortunately, in many dispute cases BCA does not provide a substantial legal base.

A good example of a solid agreement is the Unanimous Shareholder Agreement (U.S.A.), which is directed towards incorporated companies. The U.S.A. is very helpful in instances involving such disputes as the death or disability of your partner. Also, it can restrict the power of the directors to ensure that the shareholders exercise their control over the business. There is virtually no limit to what can be included in U.S.A. You can customise the agreement and set the parameters of how you will deal with different legal situations so that there are no “unforeseen circumstances” to hamper your corporate business.