Free Business Health Check

Here at Wolferstans we understand the challenges of running a business whether that is managing increased costs, generating additional sales or managing your staff.

Accordingly, many business owners have not had the time to focus on some of the internal housekeeping that can come back to bite you if it has not been reviewed. Against this background, we have partnered with Osprey Health & Safety Services to offer you a Free Business Healthcheck.

We are offering to:

  • Review your contracts of employment - which will require updating if you have not implemented the changes from April 2020
  • Review your Partnership or Shareholders Agreement - have you thought about what will happen to your business if your business partner becomes ill, loses capacity or worst of all, passes away?
  • Provide a snapshot health and safety review from Osprey Health & Safety Services

You can choose to take up all three elements of the Free Business Health Check, or simply select the reviews that you believe would be the most beneficial.

If your Shareholders/Partnership Agreement has not been reviewed for a couple of years, please do read on for additional information on what you might need to consider.

A shareholders’ agreement is a contractual agreement between the shareholders of a company. Without a shareholders’ agreement, shareholders will generally have rights enforceable against the company – which is an entirely separate ‘legal person’ from its shareholders, for the purposes of the law – but they will have no rights enforceable against each other.

Shareholders’ agreements can be tailored to fit the business at hand to make sure that:

  • Shares can only be transferred in limited circumstances, or not at all, to make sure that you have control over who can own the business with you;
  • There are provisions in place if one shareholder dies. The entire procedure to determine what happens to a shareholder’s shares can be set out in advance so that the shareholders have full control over what happens to their shares (and their business) when they die;
  • Changes to the business can be restricted so that there is greater control over the business of the company, how it operates and any major changes that can be made without the consent of all shareholders;
  • There are provisions to resolve disputes between shareholders if there should be a ‘deadlock’ situation where the shareholders cannot agree how to take the business forward;
  • It is clear how and when money can be drawn out of the business as a dividend;
  • There are clauses in place to set out what happens if a shareholder leaves the business and, if desired, a pre-determined price or market valuation figure can be specified as the price required to buy out the other shareholder(s); and
  • Some reasonable restrictions can be imposed on shareholders to make sure that they cannot work with or set up a rival business, solicit customers or solicit staff either during or for a limited period of time after they are a shareholder of the company.

These are some examples of clauses commonly found in shareholders’ agreements, but it is usually possible to give effect to almost any agreement or intention between the shareholders.

When we assist our clients with drafting shareholders’ agreements we start with their commercial aims and incorporate those into our drafting, as far as it is possible to do so, to make sure that you have a shareholders’ agreement that you understand and that works for you.

While it is always advisable for shareholders to have a shareholders’ agreement in relation to a company that they own, it is often the case that periodic amendments or changes are needed to update changes in the business or changes in the law.

If a shareholders’ agreement is not reviewed regularly, it could no longer work as intended, particularly if there are major changes in the shareholders’ circumstances, and that could reduce the amount of control that the shareholders have if the business takes an unexpected turn.

We strongly suggest that businesses review their shareholders’ agreements at least once annually and more frequently than that if there are plans to make any changes to the business – whether they are changes to the partnership’s structure or changes to the way that it is run on a day-to-day basis.

Where any two or more individuals carry on a business together with a view to making a profit, and there is no other corporate structure such as a private limited company, there is automatically a business that is run as a partnership which exists at law between those individuals.

While that is quite self-explanatory, it is often a surprise to many business owners that the standard rules which apply to a business run as a partnership are set out in the Partnership Act 1890 and those rules will apply unless there is an express partnership agreement otherwise in place. The Partnership Act is now more than 125 years old and the nature of business in general has changed beyond recognition in that period of time meaning that the standard rules are not always fit for purpose.

This means that agreeing the terms of the agreement between you and your business partners in a partnership is incredibly important, to make sure that you have a business that works in the way that you intend and without any unintended complexities. A partnership agreement can be drafted to set out:

  • What happens if one partner dies or wants to leave the business. The entire procedure to determine what happens in that situation can be set out in advance so that the surviving partners have full control over how the business continues. If there is no partnership agreement in place the default position under the Partnership Act is that the partnership is automatically dissolved on the death or retirement of a partner, which rarely reflects the intention of the surviving partners;
  • Who is responsible for meeting the partnership’s debts and in what proportions;
  • Which changes to the business can be restricted so that there is greater control over the business of the partnership, how it operates and any major changes that can be made without the consent of all partners;
  • Provisions to resolve disputes between partners if there should be a ‘deadlock’ situation where they cannot agree how to take the business forward;
  • How and when money can be drawn out of the business and how profits should be divided between partners. There is a general presumption that partners are entitled to equal shares of the profits of a business which is not always what the parties actually intend; and
  • Reasonable restrictions which can be imposed on business partners to make sure that they cannot work with or set up a rival business, solicit customers or solicit staff either during or for a limited period of time after they are a partner of the business.

These are some examples of clauses commonly found in partnership agreements, but it is usually possible to give effect to almost any agreement or intention between business owners.

When we assist our clients with drafting partnership agreements we start with their commercial aims and incorporate those into our drafting, as far as it is possible to do so, to make sure that you have a partnership agreement that you understand and that works for you.

While it is always advisable for business partners to have a partnership agreement in relation to a business that they own jointly, it is often the case that periodic amendments or changes are needed to update changes in the business or changes in the law.

If a partnership agreement is not reviewed regularly, it could no longer work as intended, particularly if there are major changes in the partners’ circumstances, and that could reduce the amount of control that the partners have if the business takes an unexpected turn.

We strongly suggest that businesses review their partnership agreements at least once annually and more frequently than that if there are plans to make any changes to the business – whether they are changes to the partnership’s structure or changes to the way that it is run on a day-to-day basis.

James Twine, Head of Business Services

If you would like to arrange your Free Business Health Check at a time convenient to you, please contact us on 01752 663295, fill out the enquiry form to the side of this page or start a live chat now and one of our team will be able to help.