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Checklist For Shareholders Agreement



CHECKLIST FOR SHAREHOLDERS AGREEMENT

Corporate Governance

Who holds the power and controls the running of the company?

How are major capital investments for the company determined?

Payment of executive compensation. Is this determined by a management team or by majority vote of shareholders?

Buy-and-Sell Arrangements

Assignment of shares upon death or total disability with a right-to-buy clause for surviving shareholder(s).

Share prices to be sold at a fair price formula.

Shares in a S corporation to be sold only if status of S corporation is protected.

Funding of Buy-Out

At retirement or death of a shareholder, the buy-out needs to be provided for.

If current shareholders are to be given first option to purchase, the purchase price and funding method must be pre-determined.

If the corporation is to have first option to purchase, corporate funds must be available to exercise such an option through periodic fund set-asides.