Shareholders Agreements
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What are shareholder agreements?
Shareholders' agreements vary enormously between different countries and different commercial fields. However, in a characteristic joint venture or business start-up, a shareholders' agreement would normally be expected to regulate the following matters:
1) Regulating the ownership and voting rights of the shares in the company, including
- Lock-down provisions
- restrictions on transferring shares, or granting security interests over shares
- pre-emption rights and rights of first refusal in relation to any shares issued by the company (often called a buy-sell agreement)
- "tag-along" and "drag-along" rights
- minority protection provisions
2) Control and management of the company, which may include
- power for certain shareholders to designate individual for election to the board of directors
- imposing super-majority voting requirements for "reserved matters" which are of key importance to the parties
- imposing requirements to provide shareholders with accounts or other information that they might not otherwise be entitled to by law
3) Making provision for the resolution of any future disputes between shareholders, including
- deadlock provisions
- dispute resolution provisions
4) In addition, shareholders agreements will often make provision for the following:
- the nature and amount of initial contribution (whether capital contribution or other) to the company
- the proposed nature of the business
- how any future capital contributions are to be made
- the governing law of the shareholders' agreement
- ethical practices or environmental practices
- allocation of key roles or responsibilities
Source: Wikipedia
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