Could you provide me with basic information on shareholder agreements?

A shareholder agreement is a legal document prepared by the founding shareholders of an incorporated company. It should be adhered to in the event of a change in the partnership. The agreement outlines how the entity will be owned and managed. Also known as a "buy-sell agreement," a shareholder agreement is typically used when a company has more than one founding shareholder.

Usually these agreements list those duties, responsibilities and rules that govern corporate actions. Shareholder agreements are often prepared with the help of a lawyer but don't have to be. Many such agreement templates are available that you can customize to your specific needs.

Before creating a shareholder agreement, partners should carefully consider a number of issues:

• Individual financial positions and how these will be affected by shareholding
• Contribution valuations, such as the value of intellectual property, or sweat equity, and how they compare to cash
• The future direction of the company (and whether or not everyone is in agreement)
• The future relationship between partners