Regardless of if you are new to business or a seasoned businessperson, having agreements in place is extremely important when going into business with a partner or shareholder.
It is best to seek the right legal and professional advice before getting into business with a business partner/shareholder and forming the agreements which will be in place to assist you and them should you ever need.
So, what is the difference?
A shareholder is an investor in a corporation. Therefore, a shareholders’ Agreement is a contract between the shareholders of a company, regulating the relationship between the shareholders and what will happen during certain situations.
A partnership agreement is an agreement between business partners who wish to enter into business together and sets out the regulations and duties that each partner will undertake and how the business will be controlled.
Both agreements are not compulsory however, to practice good business practices these documents would be completed to prevent misunderstandings and disputes in the future running of the business.
Having agreements is place is good business practice. These should be reviewed when roles change, or additional shareholders and partners are brought into the business.
If you do not have these in your business or are starting a new business venture or maybe yours are old, I encourage you to contact your solicitor and have these documents create or reviewed.
The key is to prepare for the worst and expect the best in hope that you will never need to use them.