The articles of association of private companies often contain pre-emptive rights on transfers of shares to existing shareholders. A shareholders` agreement may contain provisions that address the following key areas: A shareholders` agreement is an integral part of protecting the corporation and owners from unnecessary delays and losses resulting from a series of unforeseen events. Finally, this article will take you to a questionnaire and checklist of all the common provisions that you should take into account when drafting a shareholders` agreement, while also wishing to purchase a model shareholders` agreement in our shop. As a general rule, company law gives the advantage to the majority shareholder(s), as decisions can usually be taken by a positive majority (i.e. 51%). In most jurisdictions, there are a limited number of exceptions that require a “special majority”, i.e. two-thirds (or 66.67%) of the votes to make decisions on fundamental aspects of the business. However, when drafting a shareholders` agreement, shareholders can decide what percentage is required for certain decisions. For example, fundamental decisions directly related to the business, financing, or corporate structure may require a unanimous decision of all shareholders, while other less important decisions may simply require a majority vote. This is especially important if a shareholder owns the majority of the company`s shares, as without a shareholders` agreement, most shareholder decisions could be made by the sole majority shareholder, leaving minority shareholders with little or no vote. 6) The existence of a shareholders` agreement can help raise funds from banks or creditors and also shows the stability of the company for other potential partners. The general law protects a minority shareholder against unfair shares of majority shareholders.
A shareholders` agreement must meet the specific requirements of the company and its shareholders and may include issues of management, confidentiality, employee contracts and advisory contracts. Two other important provisions of company law should be recalled by all shareholders: Without a shareholders` agreement, the rights and obligations are less clear and/or you must rely on general and generalized legal principles to resolve the dispute. .