A close corporation members agreement template is a legally binding document that outlines the rights, responsibilities, and obligations of the members of a close corporation. It is an essential document for any close corporation as it sets out the framework for the operation and management of the business. This article will discuss the importance of having a close corporation members agreement template and what it should include.

What is a Close Corporation Members Agreement?

A close corporation is a type of business entity that operates similarly to a corporation but is limited to a small group of shareholders. In a close corporation, the shareholders hold a controlling interest in the company, and the board of directors and officers are often the same people. A close corporation members agreement is a legal document that governs the relationships between the shareholders of the company.

Why do you need a Close Corporation Members Agreement?

A close corporation members agreement is important for several reasons. Firstly, it helps to establish a clear understanding between the shareholders of their rights and obligations. This includes the amount of equity that each shareholder is entitled to, how decisions will be made, and how profits will be distributed. It also ensures that the company is run in a fair and transparent manner.

Secondly, a close corporation members agreement can help to prevent disputes between shareholders. By setting out clear rules, procedures, and policies, the document can help to prevent misunderstandings and disagreements from arising. This can save time, money, and stress in the long run, as resolving disputes can be costly and time-consuming.

What should a Close Corporation Members Agreement Template Include?

A close corporation members agreement template should include several key sections. These include:

1. Introduction and Purpose: This section should provide a brief introduction to the document and explain its purpose.

2. Shareholders: This section should identify the shareholders of the company and their respective equity in the business.

3. Voting: This section should outline the voting procedures for the company, including the number of votes required to pass resolutions and how decisions are to be made.

4. Transfer of Shares: This section should specify the procedures for the transfer of shares, including any restrictions or conditions on the sale or transfer of shares.

5. Management and Control: This section should outline the management and control structure of the company, including the role of the board of directors and officers.

6. Profit Distribution: This section should specify how profits will be distributed among the shareholders of the company.

7. Dissolution and Termination: This section should outline the procedures for the dissolution and termination of the company, including the distribution of assets among the shareholders.

Conclusion

A close corporation members agreement template is an important document for any close corporation. It helps to establish a clear understanding between the shareholders, prevent disputes from arising, and ensures that the company is run in a fair and transparent manner. When drafting a close corporation members agreement, it is important to seek legal advice, as the document will have legal implications for all parties involved. With a well-drafted agreement in place, the company can operate smoothly and efficiently, paving the way for future growth and success.