FAQ’s
Please find below a selection of commonly asked questions that relate to our commercial and corporate services.
Please note: The content of this webpage does not constitute legal advice and is provided for general information purposes.
Do I need a Shareholders’ Agreement?
Where a business has multiple shareholders or is looking for equity investment then a Shareholders’ Agreement is advisable.
a. Early initiative: The best time to put a Shareholders Agreement in place is at the start of a venture while all parties are on good terms and should be acting reasonably. Once relationships break down it is very difficult (sometimes impossible) to achieve agreement on an exit or a continuation of the business, which can result in costly legal proceedings.
b. Objectives and preparatory steps: When forming a new company it can assist to include the objectives of the shareholders within a Shareholders’ Agreement, particularly if a party has made promises about the success or otherwise of the venture. Beyond financial investment, sometimes a shareholder may be contributing intellectual property and the agreement can ensure that this is properly transferred to the business or other holding entity or appropriate licencing arrangements are put in place.
c. Investment and holdings: Minority shareholders will expect certain protections such as tag along rights in the event a majority shareholder wishes to sell their shares, and shareholders generally may wish to have rights of pre-emption on share transfers or other restrictions on the transferring of shares. Where investment is being sought, the agreement can set out whether this will comprise debt or equity (or both) and the timing and procedures relating to the same.
d. Regulate decision-making: Decisions on how often board meetings should be held, when and how dividends should be declared and paid and what happens in situations of deadlock can all be made clear. Likewise, it is common for a Shareholders’ Agreement to set out matters which will require unanimous consent of all shareholders.
e. Everything comes to an end: A Shareholders’ Agreement can deal with the death or incapacity of a shareholder, or situations where a shareholder is failing to participate properly in the business or has committed an act of default. Likewise, not all parties will have the same time horizons and some may want out sooner than others.
What different types of intellectual property are there and how can they be protected?
a. Patents: A patent protects something that you have invented. There are different types of patents, each protecting different aspects of an invention for a specific period. This form of protection is vital if you are in the business of technological innovation.
b. Trademarks: Trademarks protect symbols, names, and slogans used to identify goods or services. This protection is about brand identify, preventing others from using a substantially similar mark in a way that could confuse consumers. Trademarks can be protected through registration with the Intellectual Property Office (IPO).
c. Copyrights: Copyrights protect original works of authorship, including literature, music, and artworks, by granting the creator exclusive rights to use, reproduce, distribute, and display the works. This protection is crucial for businesses in the creative industries.
d. Trade Secrets: Trade secrets encompass proprietary business information that provide you with a competitive edge, such as formulas, practices, processes, or compilations of information. Entering non-disclosure agreements (NDAs) with third parties and ensuring employees and subcontractors are contractually bound by confidentiality are common methods to protect trade secrets.
