When setting-up a business, business owners always neglect a vital step – an agreement among partners to secure the success of future business.
Without an agreement in place, it may become a nightmare if a dispute arisen due to changed circumstances, business deadlocks, a partner wants to ‘exit’ business or other unforeseen circumstances.
On the other hand, if you have an agreement in place, the above could have been avoided or its impact to your business could have been minimised.
Options To Consider
Corporate Structure that you may consider to adopt:
- Limited liability
- Separate legal entity
- Incorporation of Sdn Bhd is required
- Financial disclosure is required
- Perpetual sucession
- Members may come & go
- Unlimited liability, which can extend to personal assets.
- No separate legal entity
- Registration is Not mandatory
- Financial disclosure is Not required
- No perpetual sucession
- Liability of partners limited to contribution
- Separate legal entity
- Incorporation of LLP is mandatory
- Financial disclosure is required
- Perpetual sucession
- Members may come & go
Frequently Asked Questions
Q : What is Shareholders Agreement?
A : A shareholders agreement is a contract between the shareholders of a business that covers the funding, structure, management and direction of the business, dividend policy as well as rights & obligations of shareholders.
No personal liability for business debt is attached to an individual shareholder.
Liabilities borne by shareholders are to the extent of unpaid shares only.
Q : What is Partnership Agreement?
A : A partnership agreement is a contract between 2 or more business partners that covers the responsibilities, profit and loss distribution of each partner, as well as other general partnership matters, such as withdrawals, capital contributions.
Each partner is equally liable for business debts.
A partner is also liable for other partner’s acts.
Q : What is Limited Liability Partnership (“LLP”) Agreement?
A : LLP is an alternative business vehicle that allows a business to enjoy limited liability status while offering the flexibility of internal business arrangement (such as no requirement to submit financial statement to SSM, and accounts need not be audited).
No personal liability for business debt is attached to an individual LLP partner.
Liabilities for business debt are borne by LLP partners on a joint and several basis, but up to the extent of contribution committed by each LLP partner only.
Q : What if my business doesn’t have an agreement?
A : If you run a business without an agreement in place with your shareholders or partners, you are advised to consult an experienced lawyer to come out with an agreement. A : If you run a business without an agreement in place with your shareholders or partners, you are advised to consult an experienced lawyer to come out with an agreement. The agreement can be tailored to your business operation and structure, as well as addressing the potential risks that your business may face, which include :-
- Deadlock in business management
- A party wants to ‘exit’ the business
- A party passes away
- Buy-out or sale of a party’s shares.
Don’t leave it to chances. You have the option to make the right choice to eliminate or minimise the risks.
Q : What if my business doesn’t have an agreement?
A : If you run a business without an agreement in place with your shareholders or partners, you are advised to consult an experienced lawyer to come out with an agreement. A : If you run a business without an agreement in place with your shareholders or partners, you are advised to consult an experienced lawyer to come out with an agreement. The agreement can be tailored to your business operation and structure, as well as addressing the potential risks that your business may face, which include :-
- Deadlock in business management
- A party wants to ‘exit’ the business
- A party passes away
- Buy-out or sale of a party’s shares.
Don’t leave it to chances. You have the option to make the right choice to eliminate or minimise the risks.
Q : What can we help?
A : Our experienced corporate lawyer can help you with the following:-
- Shareholders agreement, partnership agreement, or LLP agreement
- Employment contract
- Service supply agreement
- Supply of goods agreement
- Terms of use for your business website
- Privacy policy