An attorney and the managing principal of the Veritas Law Group, Darren Malek is licensed to practice law in Michigan and Illinois. Darren Malek is knowledgeable and experienced in business law and has worked on matters involving contracts and business formation.
When starting a private company with a business partner, the parties should write a formal agreement to protect themselves as shareholders or LLC members. A shareholders agreement is a firm representation of what is expected from each person as joint owners. It sets forth the responsibilities of each person, the process for dissolving the company or for an owner to leave the business, and the valuation of the ownership interest. Other major points covered in shareholder or operating agreements include financial contributions to the company, allocations of losses as well as profits, the decision-making process, and admittance of new owners.
Most states have statutory standards for shareholders or operating agreements but allow for substantial flexibility for owners in creating a binding agreement governing their relationship.