23 Apr Why “Business Pre-Nups” Are Important
Are you operating your business in partnership, or as a co-shareholder and director with others?
Disputes can arise at any time between you and your business partners which is why it is essential that at the outset or at least before any disagreements arise you have one or more of the following documents in place:
- A Partnership Agreement if you are in a true partnership;
- A Shareholder Agreement if you are a co-shareholder and director in a company structure;
- A Unitholder Agreement if you hold units in a Unit Trust with your business “partner”;
- A Joint Venture Agreement if the relationship with your business “partner” is indeed a joint venture.
Business partnerships are rather like marriages as arguments and personality clashes often arise in the commercial environment as they can do in the household.
This is why it is good practice to have the parties enter in one or more of these agreements, sometimes referred to colloquially as business “pre-nups”. Setting yourself up with the appropriate documentation
No two situations are the same, however, and “boiler plate” documents do not cut it when a tailored approach is invariably required.
Of course, even if you have such agreements in place, disputes can arise about their interpretation and legal effect and at this point you will need advice to manage and hopefully resolve the dispute.
Whether your business has been structured as a partnership, a company, a trust, a joint venture or a combination of these there are a number of methods by which the business dispute may be negotiated, settled or resolved. They are:
- negotiations between the partners directly but with legal advice and assistance in the background;
- direct negotiations between lawyers acting for each partner;
- alternative dispute resolution;
- appointing a receiver;
- Court proceedings.
Partnership disputes can be complex and hard fought.
You need someone with not only legal expertise but business acumen to deal with the dispute as quickly and as efficiently as possible so that you can get on with doing what you do best – running your business.