When starting a new company, it is important to consider how you are going to run the company. It’s best to plan ahead and write down in an agreement how the following issues will be addressed.
Owners- You need to list the owners, their contact information and how many shares or interests they own. It is also important to discuss owners’ financial rights and obligations, such as their initial contribution, obligations to provide funds or receive payments.
Voting- It is also important to address issues relating to voting. What rights do owners have? Can all owners vote on all subjects? How many votes are required to make certain decisions? For certain votes, such as selling all the assets of the company, a unanimous vote may be required; for others, such as borrowing money, you might require a majority vote.
Management and Authority- Who will manage the entity on behalf of its owners? Will it be one of the owners, a group of them or will they hire an outsider to perform that function? A related issue is that of authority. Do all owners have the authority to bind the entity? Is it based on their position with the company? For example, Florida law spells out the authority that a President, Vice-President, Secretary and Treasurer are deemed to have.
Transfers of Interests- In small companies, owners often put restrictions on how the shares or interests can be sold or otherwise transferred. If you start a business with a friend, you might not want your friend’s share to be sold to a third party. You can prevent such a sale by adding a right of first refusal and/or requiring your written consent to the sale. Other unforeseen circumstances, such as the death of an owner or a bankruptcy can also result in the transfer of interests.
Contact us for more information on how to plan and implement these and other important topics in creating and running your Florida company.