5 DOCUMENTS YOU NEED TO HAVE TO PROTECT YOUR BUSINESS
Whether you are just starting or have been in business for years, these documents will help you protect your business and ensure everything is in order.
The top 5 “must have” documents are the skeleton framework to help protect your business to ensure a smooth operation.
1. Shareholders Agreement
- If you run your business with partners, the Shareholders Agreement is a MUST-HAVE document.
- Unfortunately, one of the most overlooked documents among Singapore’s Small & Medium Enterprises is the Shareholders Agreement.
- The most common reason for partnership disputes is when a shareholder wants to “exit” the business.
- A Shareholders Agreement sets the rules and procedures for shareholders to exit the business. This includes specifying the price that shareholders will pay it.
- Having a Shareholders Agreement in place allows shareholders and the company to operate clearly and clearly understand exit rules.
- This can help to avoid disputes and disagreements between shareholders.
- A Shareholders Agreement can also address various issues, such as dividend policies, the structure of company operations and management rights.
2. Contracts For Business Operations
- Disputes arise when you leave room for doubt (and unscrupulous clients or contractors exploit the loophole).
- Contracts are essential for business operations, as they establish the terms and conditions of transactions between businesses.
- Contracts can be used for various purposes, including Sale and Purchase Agreements, Service Contracts, Distribution and Agency Agreements, and Vendor and Supplier Agreements.
3. Consulting Agreements
- When engaging freelance contractors, the Consulting Agreement must define the scope of services, the project/task details and payment arrangements.
- The recent growth of hiring freelance contractors to avoid payment of employee benefits has caught the attention of both the Ministry of Manpower and the Central Provident Fund Board. While it is true that verbal agreements are enforceable, written agreements provide the best source of evidence, significantly when memories fade.
- Hence, the cardinal rule of law is “Get It In Writing” – documentation is a priority instead of an afterthought.
4. Director Employment Agreement
- People very often get confused between ownership and management.
- While a shareholder owns a stake in the company, it does not necessarily mean they must be a company director.
- A company director is appointed (“employed”) by the company’s board of directors to help manage the company. Such directors, being senior positions, have specific roles and responsibilities.
- A Director Employment Agreement aims to set the terms and conditions of the director’s employment with the company.
- This includes the director’s salary, benefits, and any other terms and conditions of employment.
- The Director Employment Agreement will also typically specify how the director can be terminated and what happens to the director’s shares in the company upon termination.
5. Employment Agreement
- No business succeeds without help from loyal and dedicated employees.
- An Employment Agreement aims to set out the terms and conditions of an employee’s relationship with their employer.
- This includes an outline of the compensation that the employee will receive, as well as any benefits that they are entitled to.
- In addition, the Employment Agreement can provide a non-competition clause that prevents the threat of direct competition by a departing employee.
- Having an Employment Agreement in place is essential, as it can help clarify the expectations and roles of both the employee and the employer.