Thursday, February 24, 2011


Many closely held corporations and other entities utilize shareholder or membership agreements to govern the relationship among its shareholders and to address contingencies that might arise in the future. Once a shareholder agreement is drafted and executed, however, it is unwise to simply put it on a shelf and think that it is forever sufficient. Just with other aspects of the business, Global Business Lawyers recommends that shareholders' agreements be reviewed annually to ensure that the contingencies that are real possibilities in the future of the business are adequately addressed and continue to be as the business evolves. For example, there are a number of business valuation methods that could be employed to value the shares of a departing or retiring shareholder. Just because the shareholders agreed on a particular valuation method when the agreement was initially drafted doesn't mean that they must stick with that method forever. If a different valuation method better fits the evolving needs of the business and individual shareholders, a revision to the shareholders' agreement is probably in order. The investment of time and fees into a visit with your business lawyer to periodically review and maintain your shareholders' agreement and other business agreements helps to prevent significantly greater expenditures and potential damage to your business if litigating over an outdated and somewhat inapplicable shareholders' agreement in the future.

Disclaimer: This web site is designed for general information only. The information presented at this site should not be construed to be formal legal advice nor the formation of a lawyer/client relationship. If you have questions or need specific advice relating to the matters contained herein, please contact Lovaas & Lehtinen, P.C.

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