Part A: Founders Agreement
According to Bevans (2006), founders agreements can be defined as the declarations or the agreements that are stated when a particular business is starting. They are created after the start-up management team has been set up and mostly include the relationships to each other, to the corporation and to the other participants involved in the business. The key elements of the founders’ agreement include a brief business plan, a legal or taxable nature of the business, the nature of the perspective organization, initial operating stock and the division of shares in case a member dies, decides to quit the business or has been forced by a court order to sell among other elements.
A buyback clause is a provision in a particular contract that gives permission to the person selling a particular property to repurchase it under certain stated conditions. It provides the original buyer with the first right to purchase the property before another attempt to sell it is made. This is important because sometimes, a person may sell a particular property unwillingly due to financial constrains and give one a chance to repurchase it when he gets enough money. It can also be used as a provision that needs a franchiser or manufacturer to purchase back an inventory and equipment in case the franchisee or the distributors contract ends prematurely. This can be of great help to the distributor or the franchisee incase the contract ends before the planned time since they will not have difficulties in searching for where to sell or take the equipment and also prevents them from losses once the equipment is taken by the manufacturer. In the insurance company, the buyback clause may be used for the reinstatement of the insurance cover that the insurer leaves out or cancels if the insured person meets particular criteria. This helps to save the amount paid to the insurance company .
Part B: Steps to Avoiding Legal Disputes
If a business is not run efficiently, it can lead to many disputes resulting to losses or closure. There are several steps that can be observed to ensure that a business avoids legal disputes. The first step is to ensure that no project is started without a written contract. Written work gives a good plan of how activities should be conducted and also gives evidence in case of any dispute. The second step is to ensure that the contract is drafted by an experienced lawyer who has enough knowledge drafting these contracts. Lawyers can defend the business in case there is a dispute in the business. The written contract must contain all the necessary statement affecting the business, statutory requirements and the disclosures. The statements should be clear and in the format required by the government. The last step, you should never provide any surplus materials or labor without recording down and signing the document. This is very useful in accounting the activities of the business and solving disputes .
Part C: Steps to Building a Strong Ethical Culture
In the business environment, a good ethical culture creates good working environment thus maximizing the profits. The good ethical culture can be achieved by several methods like organizing the business to support the program. The governance structure of the business should provide independence among the workers and also try to separate compliance and ethics from the operational parts of the business. Another way is by providing training to the employees. Training provides the required skills to the employees and this gives them confidence to work peacefully thus maximizing production. The other method is by measuring success of the workers and rewarding the hardworking ones. This encourages them to work hard and this maximizes production .
Part D: Piercing Corporate Veil
Piercing the corporate veil is a legal judgment to treat the duties or the rights of a corporation as the liabilities or as the rights of its shareholders. Normally, a corporation is taken as a different legal person who is the sole beneficiary of the profits made and is also totally responsible for the debts it incurs. The corporate veil can only be pierced through a court order which imposes the personal liability on the directors, shareholders, officers or the members.
References
Bevans, N. R. (2006). Business Organizations And Corporate Law. London: Cengage Learning.
Burns, P. (2008). Corporate entrepreneurship: building the entrepreneurial organization.
Washington D.C.: Palgrave Macmillan.
