Corporate Law is a system of laws, rules, and regulations that rule over companies as an entity itself rather than looking at each employee of the company. The goal of this system is to regulate corporate activity to ensure that they are following fair guidelines.
Corporate lawyers will work by looking at the company as an entity, as well as working for the well-being of the company as a whole by supporting with business strategy, administration, and management of the company. Furthermore, corporate Lawyers in Calgary need to ensure that the company is following every guideline and regulation that is applicable. It takes care of things such as acquisitions and mergings between companies and ensures those transactions are in accordance with all regulations, and that all background checks have been made properly to ensure no surprises.
Commonly, you will come across shareholder agreements and partnership agreements in corporate law. While similar in nature, they are usually misused when not understanding the differences between them. However, in general terms, they both give the parties involved some kind of guidance in certain scenarios – such as how to deal with dispute resolutions or events of death.
On the next following topics, let us understand more in-depth what each of those two terms means.
Firstly, let us define what is a shareholder. A shareholder is categorized by owning a share in the company and having certain rights within the company such as being part of and voting at a shareholder meeting, and receiving reports. Essentially, someone who is a shareholder will buy parts of the company in order to increase its capital and, in exchange, will have their own net worth grow.
A shareholder, however, is not required to be part of the operations of the company. In fact, most people who own companies’ shares do not have any intention of being an active part of the business, instead choosing to buy and sell their shares in the market and make a profit.
A shareholder agreement can also be called a Unanimous Shareholder Agreement (USA) and it provides guidance on how to deal with events related to other shareholders, such as how to buy a retired shareholder’s interest in the company.
When you buy a share, you are making an agreement with the company in which you, to put it simply, help fund the business in return for future profit. The problem with the share market is that, frequently enough, people will buy shares in the hope they will increase value, but end up losing a lot of money. It is not easy — and sometimes not even possible — to predict the market, so if you wish to enter this kind of business, you should find a trustworthy Corporate Lawyer Calgary to aid you.
In contrast to a shareholder, a partnership is conducted when two or more entities join together with each other in order to achieve a goal that benefits all parties mutually. In a Partnership Agreement terms and conditions for this mutual aid are laid out with each party’s roles, responsibilities, objectives, funding, and more in order to ensure that the operations are being shared fairly. All parties mutually agree to those terms.
With it, those partners are entitled to rights as well such to have a guideline on how the partnership will behave in case of a series of different events. Things like how to deal in case one of the partners cannot keep the relationship, and how the profits that come from the partnership will be divided between all partners. These rules are important aspects that must be present in an agreement to ensure that fairgrounds for partners are being laid.
Instead of having an arrangement with the company itself, in a partnership agreement, all parties involved will be active players in the business world. The terms of the settlement, in this case, are between everyone in a common agreement. Usually, this kind of contract between parties is riskier, but it can also be more advantageous for each individual later.
One of the most common causes of stress between shareholders or partners is how to deal with the partnership after one of the member’s death. It is important to have those terms laid out in both agreements to ensure that everything operates smoothly continually in order to achieve the mutual goal.
Both the partnership agreement and the shareholder agreement offer, in many situations, a solution for many of those problems by laying out ground rules beforehand in a legally binding agreement. It builds trust between all parties.
It is always in your best interest to have a strong agreement with your partners or other shareholders in order to avoid potentially costly legal fees in dispute resolution. Those agreements are great tools to support the longevity of the partnership.