Accountants and solicitors have for a long time trumpeted the importance of business agreements which govern how the owners interact with each other. Ensuring that they have been professionally drafted was brought into focus on the Archers this week.
Any one who has been following the Radio 4 soap opera of farming folk will have heard how Brian Aldridge has been ousted as Chairman of BL. This occurred because Brian was unaware that the majority shareholding in BL had been sold to an outside investor. The first he knew was a hastily organised Shareholders’ meeting the result of which, as aired on Wednesday, was that he was ousted as chairman, and to cap it all on his 70th birthday. Love him or loath him I did feel slightly sorry for Brian, how he must have wished he had a properly drafted shareholders agreement or even a set of company articles with suitable pre-emption rights, preventing or restricting the sale of shares to outside investors.
In the farming context there are many 70 year olds still actively involved and contributing a lot to their farming business but how many of their businesses have either a shareholders or partnership agreement that governs such issues? Not many I would contend. Although you are unlikely to be ousted from your role by an institutional investor like Brian, in the family context in which most farming businesses operate an agreement that ensures the smooth and amicable succession down the generations is much better for all concerned.
If your business does not have such agreements it is never too late to put one in place and the time to do it is when everything is running smoothly.
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