An Argyle Business Owners Agreement

A business owners agreement is a succession planning document principally designed to deal with issues that are not insurance related. For example, a business owners agreement provides a mechanism for the transfer of business interests should a person retire, resign or be forced to leave the business.

In addition, the business owners agreement will deal with issues such as the period of notice that a person is required to give prior to them leaving the business and any conditions that will be imposed on that person restraining them from competing with the business after they leave.

Other issues typically dealt with in a business owners agreement include the imposition of positive obligations on a person leaving the business to ensure, as far as is possible, the "seamless" handover of customers, clients or other business contacts to the continuing business principals, ongoing confidentiality of business information, the provision of any ongoing finance for the business and the maintenance of relative ownership interests in the business wherever possible.

Business owners agreements may also provide direction as to the appointment of accountants to the business, bankers to the business and management committees and the responsibilities that each may have.

Provisions such as this help to ensure the ongoing stability and commercial profitability of a business as well as dealing with the transfer of business ownership in a way that offers legal certainty and is in a timely and cost effective manner.

The important clauses typically found in a business owners agreement are:

• Inconsistency with other Business Documents
• Dealings with Ownership Interests
• Principal Leaving
• Restrictive Covenant
• Pre-Emptive Rights
• Majority Sale
• Changing Owners
• Maintaining Ownership Proportions
• Additional Finance
• No Encumbrances
• Guarantees
• Confidentiality

If you would like further information click here to e-mail our Tax and Superannuation Team.