It was just another Monday, as Simon entered his law office, looking forward to slaking his thirst with a comforting cup of tea. He shrugged off his suit jacket and hung it up. While he waited for his computer to wake itself for the day ahead, he made himself a cup of tea.
He was just about to have a sip, when the phone rang. He put the tea down. Reception told him that someone was here to see him, no appointment in place, but it was apparently urgent. Taking a last look at his untouched drink, he went downstairs and shook hands with Reggie, who was flustered, Sally’s cousin.
“I’m joining someone in an engineering business, it’s all got to be done by tomorrow for some reason, and I’ve got all this paperwork to sign. In fact, I’ve already signed it and was going to hand it over, but Lory said I better come and see you first. Well, she demanded it.”
Simon sat Reggie down in an office, and had a look at the papers provided. Reggie was joining two other people in a company which ran the engineering business, he was going to take over from a current owner, and this all had to happen by 31 March for tax reasons. Simon went back to his room, grabbed his favourite pen, ignored the cold cup of tea on his desk, and returned to an expectant Reggie, who said: “We’re all good to go, aren’t we, can I just pay the money and get on with it?”
Simon put down the documents, looked at Reggie, and took a deep breath. “Reggie, there are some really important things to think about first:
Due Diligence – how well do you know the people you are going into business with? Do they have experience in the industry, in this company, do they have a good reputation? Are they financially sound, can they help bail the company out of trouble if necessary, have they had money problems in the past?
Shareholder Agreement – it is essential that you and the other owners sign an agreement which sets out expectations of each other, whether you will need to put more money into the business, who makes decisions, and when do you all have to agree.
You should commit to a timeframe where no one can pull out of the business, and if they do they must offer the shares to each other.”
Reggie’s eyes were wide open. “Thanks for this, I’ll have a good chat with the others, I won’t sign anything, and I’ll come back and see you shortly.”
Simon waved him goodbye, and poured himself a cup of tea. He knew that was not the end of this story.




