If you`re a business owner looking to merge with another company or bring on new investors, you may need a voting agreement. A voting agreement is a legal document that outlines how shareholders will vote on certain matters, such as the election of directors or major business decisions.
Having a solid voting agreement in place can prevent disagreements and confusion among shareholders and ensure that key decisions are made in the best interest of the company. To help you get started, we`ve put together some tips for creating a voting agreement template.
1. Define the purpose of the agreement
Before you begin drafting your voting agreement, it`s important to define the purpose of the agreement. Are you looking to bring on new investors, merge with another company, or simply outline how shareholders will vote on major decisions? Knowing the purpose of the agreement will help you determine what clauses to include and how to structure the agreement.
2. Identify key voting issues
Next, you`ll need to identify the key voting issues that will be covered in the agreement. These could include the election of directors, major business decisions, or changes to the company`s bylaws. It`s important to be as specific as possible when outlining these issues to avoid confusion or misunderstandings down the line.
3. Determine voting thresholds
Once you`ve identified the key voting issues, you`ll need to determine the voting thresholds required for each issue. For example, you may require a simple majority vote for routine business decisions, but a two-thirds majority for major decisions such as a merger or sale of the company. Again, being as specific as possible in the voting thresholds will help prevent disputes later on.
4. Address shareholder obligations
Your voting agreement should also address shareholder obligations, such as attending shareholder meetings and casting their votes in a timely manner. You may also want to include provisions for the removal of a shareholder who fails to fulfill these obligations.
5. Include dispute resolution provisions
Finally, it`s important to include dispute resolution provisions in your voting agreement. This could include provisions for mediation or arbitration in the case of a dispute, or a process for resolving disputes through binding votes or other mechanisms.
Creating a voting agreement template can be a complex process, but it`s essential for any company looking to merge with another company or bring on new investors. By following these tips and working with an experienced attorney, you can create a solid voting agreement that protects the interests of your company and its shareholders.