Roles of an entrepreneur

Partner by a shareholder agreement

A limited company is owned by its shareholders. They use their power in shareholders’ meetings, which is the decisive body of the company. A shareholders’ meeting is organized to elect the board of directors for the company, to approve the financial statements and to release the management from liability. Shareholders’ meeting also decides how to use the profit that company might have, and makes all the fundamental changes of the company, such as (i) new lines of the future business, (ii) new content of company’s policy, (iii) extra stock issues, or (iv) possible option agreements.

It is common (and also recommended) that all key individuals of a recently-established company are made committed to the firm through shareholder agreement or an option agreement. Ownership in a company provides the persons with required incentives so that the motivation to develop the company remains on good level. Entrepreneurship is sharing risk, responsibility and tasks and therefore the revenues of the business should be equally shared too.

It is however recommended that the terms of becoming and acting as a partner are discussed and agreed beforehand. A comprehensive shareholder agreement serves well in documenting the intentions of the persons.