Partnership in an existing company

You should consider buying shares in an active company if you want to be a partner in business operations but not on your own and without any previous experience. Buying shares in a company is easier if you know the company, its sector of operations and the other shareholders.

Buying shares in an active company is often easier than acquiring an active company or its business operations. It is also less complicated that establishing a new company.

Moreover, buying shares is relatively safe: the company also has other shareholders that have already accumulated experience of the company and its operations. Note, however, that as a shareholder, you are also expected to understand how the company works and know the basics of entrepreneurship.

Sometimes you may become a shareholder in an active company because your employer proposes that you become a partner and buy shares. Share-based incentive schemes are also used at some workplaces. In such schemes, good work performance is rewarded with the right to buy shares in the company and to increase one's shareholding.

If you want to buy shares in an active company, you should first carry out thorough reviews of the company's condition (or order the reviews from an expert). You can get information from the company's financial statements and other documents, as well as from other shareholders. You should also find out about the company's reputation.

Check whether the company is profitable and how the profitability is developing. It is also essential to check the number of orders and whether there will be any changes in the total in the near future. You should also examine the prospects of the sector in which the company operates.

If you are planning to buy shares in a general partnership or a limited partnership, you should make a particular thorough check of its debts. If you are elected as a general partner in a partnership, you are liable for its debts with all your personal assets.

Matters concerning individuals and relationships between shareholders should also be analysed. What are the personal characteristics of your partners, can you trust them and how do you get along with each other? If the company already has more than one shareholder, check that there are no problems in the personal relationships between them.

It is impossible to agree on all matters essential to the running of the company in the articles of association or the partnership agreement. You can agree on practical arrangements with other shareholders by concluding a shareholders’ agreement with them.

In the shareholders’ agreement, the company's shareholders agree in detail on their mutual relationships and their relationship with the company. You can agree on such matters as the division of labour, non-competition obligation, confidentiality and the practices governing the selling of shares. The agreement also serves as a risk management tool with which you can steer the company.

The shareholders’ agreement should be made in writing. It is a free-form document and binding on all parties. If a party to the agreement violates it, they often have to pay a fine. However, a violation does not make the decisions made by the company invalid.

Even though a shareholders’ agreement is voluntary, it is nevertheless recommended. Use expert assistance when preparing the agreement. The agreement is usually confidential, which means that its contents are not shown in the trade register.