Don’t lose control of your business
Picture the scenario: you are a shareholder in a company, with two other shareholders. Shareholder A sells his shares to Shareholder B and with the proceeds of sale sets up a competing business, poaching key employees and customers of the company. As for Shareholder B, he now has majority control of the first company and a different idea to you of the direction that it should go in. Suddenly the business that you helped to grow and maintain is out of your control.
This illustrates just a few of the reasons that you should have a shareholders agreement, which can help to ensure that you will not face such difficulties. In this hypothetical scenario, relevant provisions in the agreement could have included pre-emption rights which would apply when a shareholder intends to transfer shares and restrictions on a former shareholder soliciting customers and employees.
A shareholders agreement can also deal with many other issues including succession, dispute resolution, and minority protection.