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1. I want to go into business with my brother. We totally trust each other. Why would we need a written agreement?
Sometimes, a business partnership affects other people, like your
spouse. What if one of you has an accident, gets married or gets
divorced? Talking through these issues now can prevent
2. My dad is willing to finance my business, but he doesn't want to manage it. Can we still be partners?
Your father would likely prefer to be a "limited
partner," with no management responsibilities and limited
liability. You can specify in the contract the scope of each
partner's contribution and responsibilities.
3. I'm starting a company with some college buddies. We've know each other forever, but what if one of them sells his or her shares to someone I don't trust?
In a shareholders' agreement, you can restrict share transfers.
For example, one type of clause requires the approval of
shareholders or directors (likely you) on all share transfers.
Another common clause gives existing shareholders the right to buy
shares before they are sold to anyone else. The same rules apply for
issuing new shares. This way, if one of your buddies wants to sell
her shares, she has to offer them to the rest of you first or get
your approval for the sale.
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This page last updated: September 23, 1999
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