Shareholder Agreements
What is a shareholders’ agreement?
A shareholders’ agreement is a contract between the shareholders of a company, which provides a framework for how the company is set up and administered and how disputes between shareholders will be resolved.
There should also be a shareholder’s agreement where two or more shareholders have entered a joint venture. A shareholder’s agreement is not the same as a company constitution.
In some cases, the company’s constitution will be sufficient and it is not necessary to have a shareholders’ agreement, however, a shareholder’s agreement is preferable for two main reasons:
Clients like to keep sensitive arrangements between shareholders confidential but the constitution is a public document.
A constitution can be changed by a special resolution of the shareholders, which is generally 75% of the shareholders entitled to vote, whereas a shareholders’ agreement will generally provide that changes can only be made with 100% shareholder approval.
What is included in a shareholders’ agreement?
directors and the conduct of the company affairs; –
the transfer of shares in the company
the valuation of shares if one shareholder wishes to sell and
the process for introducing new shareholders
specific matters requiring unanimous shareholder approval
Having a shareholder’s agreement protects all parties from a long legal battle.
If you need to have a shareholder’s agreement drawn up please give us a call on 09 267 2700 or contact us