Shareholder's Agreements

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galwegian44

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I'm in the process of setting up a new business with a friend of mine and our intention is then to partner with a French company to deliver this service.

I've received some quotes re: Shareholder's Agreements for:

1) Initial agreement with my friend to set up our company
2) Subsequent agreement between our company and the French company.

The cheapest of these quotes are €1,000 plus VAT for #1 and €1,750 plus VAT for #2.

I've done a lot of research on this and believe that I have anticipated most scenarios (the internet is a wondrous place) and inserted them into my draft agreement.

I do understand the importanace of such agreements and want to make sure that everything is truly copperfastened but I'm failing to see what the solicitor provides that will warrant a minimum payout of approx. €3300+.

Am I missing something here or should I keep looking?

Thanks in advance for your comments.
 
I think if you are happy to prepare a draft that covers all anticipated scenarios to your satisfaction, and both you and your primary business partner are content with it (usually because each of you is treated equally), then print it and both of you sign two copies, and give each other a mutually signed copy. However things may be a little more complicated when you add a third party, who may or may not become an equal one-third party, and some legal or even good accounting input may be money well spent.

Remember the old adage about the guy who charged a load of money to tap his hammer once on a machine to fix it - it's not the time it takes to tap the hammer, it's the knowledge and experience of knowing exactly where to tap it! So a relatively small investment in a good tight shareholders' agreement may be money well spent in the event of trying to resolve a dispute later on, as the price of a well-drafted agreement should reflect a lot of legal expertise that went into drafting it in the first place!
 
It seems to me to be very cheap and I would wonder about the expertise of the person charging such low fees.

But you are taking the correct approach. Draft it yourself. But a good solicitor will anticipate problems you have not thought of.

Get the one between yourselves done first and see whether the fee is worthwhile before assigning them the more difficult one to do.

Brendan
 
Thanks guys for the replies. The cheapest quote came from a referral from a friend of mine who is a partner in a leading accounting firm in Ireland so I'm assuming they are good at what they do or wouldn't have been recommended.

Having said that I may be missing something here because I don't see that €1,000 plus VAT is cheap when at a minimum they are stamping and signing a document that I have researched, written and agreed with my business partner. I do take the point that they will have the expertise that I don't (and I certainly acknowledge the value of this) but in a relatively straightforward partnership I may not be getting the value of that expertise....but still paying for it.

I've seen a number of Shareholder Agreements over the past few weeks and none have been as detailed as the one I put together so maybe that's why I belive the price is inflated.

My expectation is that we will go to the solicitor's office and will be out the door again within the hour having spent €1,000 plus VAT......is this realistic?

Thanks again.
 
when at a minimum they are stamping and signing a document that I have researched, written and agreed with my business partner.
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That's the minimum they will do. The maximum is that they will read your long document and raise a number of issues with you which you have not considered.

They will redraft bits of it. And they will probably have to explain some aspects of the law to you.

I would be very surprised if they could do all that in an hour. They probably charges €300 per hour, so I guess it will take three hours.

Brendan
 
Good points Brendan, I wish they would quote me by the hour, then I wouldn't have to deal with the smoke and mirrors.

At €300 per hour my first inclination is to outsource this but unfortunately it is region specific so I'm stuck with local options.

Anyway, it's an extremely important document so no point in cutting corners.

Thanks for all of the advice.
 
It was good to hear on Newstalk (about 8:50 on Breakfast at Newstalk) this morning that the Competition Authority are criticising solicitors in Ireland for charging the highest rates in Europe and noting that there has been no decrease in professional rates despite the recession.

I haven't been able to find anything online in relation to this but would appreciate a link if anyone else comes across it.

Thanks in advance.
 
galwegian44 said:
Good points Brendan, I wish they would quote me by the hour, then I wouldn't have to deal with the smoke and mirrors.
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I'm sure they will also give you their hourly rate if you ask. Normally people want a fixed quote rather than an hourly rate so that they know the total costs in advance.

Also, the quote you have already may be based on them writing the shareholders' agreement, rather than them reviewing one you've already created. That said, it may easily take just as much time to review an existing document as it does to give you one of their templates.

I agree with Brendan that the costs appear fairly low, particularly for the second agreement.
 
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