Why is a shareholders’ agreement valuable? How can it protect you and the future of your company?
A shareholders’ agreement is a contract between the shareholders of a company that addresses the management of the company and sets out the rights and obligations between the shareholders.
However, it's not a one size fits all document. A shareholders’ agreement should be tailored to the specific needs of the company, its buiness and the shareholders.
A shareholders’ agreement addresses several important matters that can arise during the life of a company.
Some of the matters that a shareholders’ agreement should cover include:
strategies for the shareholders, such as the agreement to sell
shares on particular occurrences like the death of a founder or an
offer to acquire trhe company
of working owners.
company directors are appointed and removed.
rights of both the directors and shareholders. Generally, the
directors control the day to day operations of the company. However,
there may be certain critical business matters that requires all
shareholders (or shareholders who together hold a particular
percentage of the company’s share capital) to decide on that
dividend distribution policy for profits of the company.
requirement and conditions of any shareholder loans.
restrictions on competition with the company.
dispute resolution procedure in the event that a dispute arises
between the shareholders.
Some specific matters that should be considered:
occurs in the event of a voting deadlock? For example, a particular
director having a casting vote in addition to their deliberate vote,
or a third party referee (such as the company’s accountant) who
may make recommendations on decisions.
the key roles of each individual key person need to be ...