Setting up a company is very straightforward and usually only requires the services of a Company Formation Agent. If your company is intended to have more than one shareholder, however, it is important to have a lawyer produce a well-drafted shareholders agreement and articles of association (the Company’s constitution) to govern the following (among other things):
- Who gets a seat on the Board;
- How shares can be transferred – e.g. whether pre-emption (offer-round) rights apply; whether a minority shareholder can be forced to sell to a third party buyer; whether shares can be passed to family members; whether shares have to be sold on the death of another shareholder; and how employee shareholder shares are dealt with on cessation of employment;
- How the company is financed;
- How Board or shareholder deadlock can be resolved;
- Minority protection rights;
- Non-compete restrictions for departing shareholders.