Experts Explain the Importance of Shareholders Agreements

Melbourne's top Xero accountant, XO Accounting, explains why shareholder agreements are a key component of building a business relationship.

xero accountant melbourne

Any seasoned business owner knows well that although new business relationships are exciting, it is extremely important to ensure that everyone involved - including the business itself - is protected in the event that something could jeopardise or dissolve the relationship. The leading Xero accountant Melbourne wide, XO Accounting, is a voice of authority on financially protecting a business no matter what its size; they explain the importance of preparing a shareholders agreement.

XO Accounting explains that a shareholders agreement ensures that everyone involved in the partnership is on the same page about what happens if the relationship were to break down. Generally, a typical shareholders agreement would include items such as the process to be followed if one shareholder wants to sell their shares; the work and duties expected of a shareholder; how directors are appointed; how the company will be funded; what happens if a shareholder ceases working for the company; and what authority shareholder have to make business decisions, enter contracts or spend company money. 

Of course, no shareholders agreement is going to cover absolutely everything, says XO Accounting. Each business will have its own set of values, and business owners can decide what is most important to them to include in a shareholders agreement. XO Accounting warns business owners and shareholders, however, that small disagreements can lead to major tensions in the business amongst other shareholders. Their best advice for dealing with this is to make space for open communication, preferably facilitated by an independent party like a lawyer or an accountant. 

Although the process of preparing a shareholders agreement can be time-consuming and sometimes tedious, XO Accounting urges business owners to invest as much time and effort as they can into preparing them -  and ensuring that they are properly signed and executed. Otherwise, business relationships can break down quickly, and the state of the company will be severely compromised. They are a near-foolproof way to ensure the continued success of a business.

To learn more about XO Accounting's accounting and resident director services, get in touch with their team today.

XO Accounting

Phone - 1 800 106 141
Email -

Source: XO Accounting