Legal Protection for Business Owners & Agents
Corporation codes and limited liability laws limit the liability of the owners for certain actions taken by the company and the other owners. However, sophisticated business owners typically rely on a number of other devices to shield themselves from liability for company actions taken in good faith, and to establish and preserve their rights. Our firm, Oles Law Group, has experience helping our clients structure appropriate and dependable protection for the company and for its owners, directors, officers and agents. With an A+ Rating by the BBB® and a track record of success, you can trust that our Alpharetta business lawyer has the ability to handle even the most complex cases.
Common means of protection for owners, executives and directors may include:
- Indemnification Obligations
- D&O Insurance Coverage
Documents Establishing Protection for Owners & Agents
- Agency Agreements – Businesses require contracts for the individuals and entities they engage to perform services for them. Agency agreements establish the areas in which the agent may exercise authority for the business, and also the manner and amount of compensation the agent will be paid.
- Commission Agreements - Companies often enter into formal written contracts with their sales force, under which the terms of performance and commissions are established. Commission agreements also may include what happens upon termination, and other events that may occur.
- Executive Compensation Agreements - Typically executives will have carefully structured agreements setting for the term of their engagement, the amount and nature of compensation, the terms of any bonus or incentive pay, and the conditions under which either party may terminate the relationship.
- Employment Agreements – Businesses often enter into formal written agreements with key employees whose loss would be harmful to the business. Employment agreements typically establish the length of employment, the rate and manner of compensation, and the conditions under which the relationship will terminate.
- Equity Agreements and Option Agreements – Some enterprises, particularly new ones, do not have significant cash flow and may offer shares of ownership as compensation to certain employees. This may be a large or small component of overall compensation. These agreements will typically establish the amount of ownership the employee expects to receive, the amount of time he or she must stay in order to be eligible, and the manner in which the equity share may be converted into cash.
- Golden Handcuffs – This refers to arrangements whereby a company enters into financial incentives with an officer or employee to remain with the company.
- Incentive Agreements - Businesses may enter into contracts with agents in order to provide incentives to perform certain tasks, such as close sales contracts, locate and complete acquisitions, sell assets or take other action valuable to the company. This may include the use of: incentive options, restricted stock, bonuses, commissions, and other forms of compensation or reward
- Sales Agreements – Companies often enter into formal written contracts with their sales force, under which the terms of performance and commissions are established. Sales agreements also may include what happens upon termination, and other events that may occur.
- Severance Agreements – Severance agreements establish the terms under which a departing agent or employee agrees to release the company from liability for things that may have happened during the term of engagement. The law requires strict compliance with legal requirements in order for these agreements to be effective.
- Indemnification - This concept refers to the terms under which the company or agent will make the other whole for damage it has caused. Indemnification typically requires that the agent have taken actions on the company behalf in good faith, and met other special conditions.
- Insurance Coverage and defense Closely related to the concept of indemnification, companies will typically contract with third parties to absorb certain risks of loss. Common insurance policies including liability policies, Directors and Officers liability policies, automobile and truck policies, and life insurance policies. Special terms set out the conditions under which an employee, agent, officer, or company is entitled to indemnification and disputes over coverage and liability are common.