, have you thought of this before...

One day, you get the sad but obvious news of the passing of one your shareholders...

And top make matters worse, this happens to be one of the key men in your business.

What would happen to his shares and all?

well, we let us look at this a bit.

No one really knows what will happen in the future and that's why you must plan for every eventuality in your business.

You see, a good shareholders Agreement will not leave any stone unturned .

The whole aim of the Shareholders Agreement is to protect your interest in the Company even when you are no more.

In describing the parties to the Agreement we often include the heirs, legal representative and next-of-kin of the parties.

By including them, you actually mean for them to step into your role when you are no more.

Shares or Equity is an inheritable Asset that can be passed or transmitted from a deceased person to his living representative(s).

This representative could be his wife, Child(dren), brother, sister, even friend.

This provision, which caters for what happens to the shares of a deceased shareholder is called a "Transmission" Clause.

the clause should be comprehensive enough to cover the procedure for transmitting the shares to the deceased person's heir or representative.

A share transmission is not the same as a share transfer.

in a transfer of shares, the living shareholder actually "transfers" or sells his shares to another person who may not necessarily be his heir, Next-of-Kin or legal representative.

Transmission on the other hand is by operation of law but the shareholders just first make provision for what happens to the shares of the shareholders upon death of any of them.

so, , The shareholders Agreement is one of the key legal documentation that you must have in your business especially at the early stage of starting.

Please note that the shareholders Agreement is different from the Articles and Memorandum of Association of the company issued by the CAC.

The Shareholders Agreement is a contract between the company and its Shareholders.

don't play with this as it saves you from many future heart aches.

If you need our help in any way to get this sorted, you can reply this email immediately and let us help.

To your #LegalSense.

-Barinaada.