Organisation Structures
Organisation structures - Share Structures - Business Structures. Very often, the capital structure is not the most appropriate for the owners.
Most corporate structures can be improved.
Getting an appropriate structure is helpful to shareholders, and assists the smooth running or an organisation. When most private companies are being formed for the first time, the owners tend to make a few mistakes. Often the new owners of a small business adopt a simple format memorandum and articles of association presented to them by their solicitors or accountants. With the benefit of hindsight after a few years in business they find this was a mistake. The approach to the formation of the business could have been better. Certain structures could have been included at the outset to help them run the business better, and to help the shareholders to avoid some of the consequences of disagreement.
Company formation should be offered to new shareholders with a stronger range of options to cope with this.
The starting point often is a shareholders agreement. Initially the main issues to be addressed would include: -
- the structure of the board of directors,
- the rights attaching to any classes of shares to appoint board representation,
- quorums for board meetings and shareholder meetings,
- dividend policy,
- transfer of shares
- dealings in shares,
- deadlock arrangements,
- change of control matters,
- termination,
- default arrangements.
The shareholders agreement should also cover the following: -
a) any special conditions or rights attaching to any particular shareholders,
b) any ratchet mechanisms to motivate any key parties,
c) how additional funding or dilution of shareholdings would be addressed,
d) how decisions will be taken on key matters such as:
- capital expenditure
- employment of key personnel
- directors remuneration
- borrowings
- security
- what happens to minority interests on a disposal
- what happens to allow a shareholder to exit.
The articles of association should deal with the following issues: -
i) the share capital structure
ii) variation of rights attaching to shares
iii) the allotment of shares
iv) the transfer of shares
v) calls on shares
vi) increase and alteration of share capital
vii) purchase of own shares
viii) general meetings
ix) votes of shareholders
x) directors
xi) dividends
xii) accounts.
A well structured shareholders agreement, along with a wider scope approach adopted in the articles of association, can assist the parties to have a smoother long term relationship.
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Telephone:
+353 -1- 494 53 28.