If your small business has grown and now you wish to evolve it into a corporation, there are some things you should consider. How many partners do you want to take on? Do you want shareholders eventually? How much say in the daily operations does each partner have and do shareholders have any say on the operations? How much compensation does each partner get and what dividends do shareholders receive?
What happens if a dispute arises at any time between partners or shareholders? You can avoid some of the major disputes by drafting articles of incorporation that stipulate certain things about the running of your company. Contact a corporate lawyer to help make sure the contract is fair for everyone. Here are some tips in drafting the contract that can help you to avoid disputes.
Vet Potential Partners Before Drafting A Contract
Before you even draft a contract for incorporation, you should vet any potential partners and shareholders. This is to ensure that all partners and those who wish to invest in your corporation share your values, your ethics, and your vision of where you see the company going. You want partners who will conduct business in the same manner or at least similarly to you to avoid disputes.
Your corporate lawyer can help you vet potential partners and shareholders or give you suggestions and advice on what to look for. You also want to find partners that have different skills than you do. You want to find ones that have strengths where you have weaknesses to complement your own strengths. This will help to make the corporation stronger.
Insert Potential Means Of Resolving Conflict
Your corporate lawyer can help you draft any conflict resolution ideas into your articles of incorporation. This should be agreed upon by all partners involved. Sit down with your partners as well as your corporate law professional and discuss how you wish to resolve any potential problems or issues that might arise at any time during the company's operations.
Take your time going through this. Make sure all parties agree to all aspects of the dispute resolution. This can go a long way to avoiding any prolonged legal battles or disputes among partners that can delay work being completed or the corporation from dissolving.
Draft A Contract Everyone Is Comfortable With
It's important to draft a contract that every partner is comfortable with. This can take time as different partners might have different ideas they wish to incorporate into the company and all thoughts and ideas should be listened to and considered carefully.
All partners should be comfortable with the end result of the contract. Your corporate lawyer can go over every detail of the contract with you and ensure everyone understands each point and agrees with it. This goes a long way to avoiding potential disputes as everyone's needs and ideas are represented in the final contract.
If you need help or have more questions, reach out to a local corporate lawyer.