A shareholders agreement is an agreement between the shareholders of a company that governs how matters that may arise between the shareholders will be resolved.
It effectively lays down the rules of engagement between shareholders of a company.
Early consideration of issues that may arise between you and other shareholders in the company may ensure ongoing harmony between shareholders, thereby saving you, the other shareholders and the company the expense of engaging lawyers to resolve disputes and ensuring that everyone is focused on running the business.
Some of the issues that are commonly dealt with in a shareholders agreement are:
- Who can be a shareholder;
- Who can serve on the board of directors;
- What happens if a shareholder becomes impaired or dies;
- What happens if a shareholder files for bankruptcy, resigns, retires or is fired;
- What happens if a shareholder wishes to sell its shares;
- What happens if there is a boardroom deadlock;
- What decisions can be made by a simple majority of shareholders and what decisions require a special majority of shareholders.
Each shareholders agreement is unique and the above issues are just some that may be dealt with in a shareholders agreement.
Our team of commercial lawyers have extensive experience in drafting shareholder and other commercial agreements and will gladly assist you.
It is important to seek specific advice regarding your circumstances as this fact sheet provides general information only and does not constitute legal advice.