When starting a business with multiple shareholders, it`s important to have a shareholders agreement in place. This document outlines the responsibilities and rights of each shareholder, as well as the process for decision-making and dispute resolution. If you are running a business in California, it`s crucial to understand the specific regulations that apply to shareholders agreements in the state.
One of the first things to consider when creating a shareholders agreement in California is the requirement for unanimous shareholder approval. In California, any amendment to the articles of incorporation or bylaws must be approved by all shareholders. This means that any changes to the shareholders agreement must also be approved unanimously, unless the agreement specifically states otherwise.
Another important consideration is the restriction on shareholder voting agreements. In California, any voting agreement between shareholders that lasts longer than three years is considered invalid. This means that if you want to create a long-term voting agreement, you`ll need to renew it every three years or less.
California also has specific regulations around shareholder inspection rights. Shareholders are entitled to inspect the company`s books, records, and financial statements upon written request. The company must provide access within five days of receiving the request.
It`s important to note that California law prohibits companies from completely restricting the transfer of shares. While the shareholders agreement can include restrictions on transfer, these restrictions must be reasonable and not unreasonably restrict the transfer of shares.
Finally, if your company is a professional corporation (such as a law firm or medical practice), there are additional regulations to consider. In California, professional corporations must have a specific type of shareholders agreement that outlines how the company will be managed and how profits will be distributed.
Creating a shareholders agreement that complies with California law can be complex, but it`s crucial for protecting the rights and responsibilities of each shareholder. Working with an experienced attorney who understands California`s regulations around shareholders agreements can help ensure that your agreement is legally sound and protects the interests of all shareholders.