Is a Shareholders or Partnership Agreement Right for You?
PLATO Admin -
The difference between partnership and shareholders agreement
Both shareholders agreement and partnership agreement concern what the individuals involved will receive for their work together and determines what they’re responsible for (such as with drawings, loans, capital contributions, dispute resolutions, dividend payments, etc). Shareholders agreement and partnership agreement are very similar in what they demand. Shareholders agreement comprise additional material characteristic to a corporate set up (like who can serve on the board of directors of the company, what will happen if a shareholder files for a bankruptcy, or who the shareholders are). In respect to things like introducing new members, making decisions, and veto powers, both kinds of agreements handle governance issues.
Why you should ALWAYS have a shareholders/partnership agreement
Because unneeded and preventable disputes between partners or shareholders can waste away time, money, and even ruin a business, it’s a good idea to have an agreement made up (no matter what kind of business structure you have!) Before there’s even a chance for disputes, and you are drafting your agreement, make sure that it defines the duties and rights of each party with clarity.
To help you decide, consider that companies are considered legal entities. This means that even though the employees of that company may leave or stay, the company will stand (given it meets Indonesian law’s requirements).
Is your business operated through a company? If not, then a partnership agreement is likely best for you. This will dictate the relationship between you and your business partner. If one of you passes away or decides to quit, then your partnership will terminate (much like a real relationship).
On the other hand, if your company is incorporated, then you’d be best choose a shareholders agreement. This is an agreement between the company and the shareholders.
Want to speak with a Plato consultant to learn more about shareholders and partnership agreement? Call us today at +62 21 2988 7964 and we can help with establishing your Indonesian company, electronic signatures, customising legal documents, and fixed-fee quotes (tailored to your specific budget and needs!) from Indonesia’s best pre-vetted lawyers.