Any agreements between shareholders of the company that includes rights and obligations related to how shares can be transferred or votes can be made at shareholder meetings.
A critical part of your company documentation, a shareholder agreement is an agreement made between two or more shareholders, independent of the company’s constitution or contracts in which the company is involved.
The agreement may contain clauses on the roles and responsibilities of shareholders, how your company will be managed, how disputes are to be resolved, the rules and requirements around new share issuance, the sale of shares and how to handle a takeover offer.
A standard company constitution or articles of association will not always protect you and your shareholders in the event of a dispute between shareholders and members. Every shareholders’ agreement should be individually tailored because every company is different.
Certainty and risk minimization are very important for any investor or lender to consider when they enter into a new transaction. Without a well drafted shareholders agreement, the rights and responsibilities for shareholders remain unclear and therefore open to interpretation and litigation in the future.
A well drafted shareholder’s agreement gives investors confidence as it provides clarity to the rights and responsibilities of equity holders relative to other stakeholders including: