Shareholder Agreements
When? How? Why?
A shareholders’ agreement is important for a number of reasons and this is why you should have one:
- Clarity and Understanding: It helps establish clear expectations among shareholders regarding rights, responsibilities and the operation of the company.
- Conflict resolution: Defines mechanisms for resolving disputes, preventing conflicts from escalating and potentially damaging the company, particularly where there is deadlock.
- Decision making: Outlines the decision-making process voting rights procedures for major company decisions, ensuring a structured approach to key matters.
- Transfer of shares: Specifies the conditions and process for transferring shares protecting the interests of existing shareholders and maintaining control over ownership,
- Protection of Minority shareholders: Provides safeguards for minority shareholders ensuring their rights are respected and protected.
- Exit strategies: Addresses how shareholders can exit the companies and under what conditions, helping to plan for future scenarios like selling shares of the entire company.
- Confidentiality: Includes provisions to maintain confidentiality, safeguarding sensitive company information.
Overall, a shareholders’ agreement helps create a stable and well-defined framework for the function of the company, reducing the risk of disputes and promoting a smooth operation. If you are thinking about a shareholders’ agreement or may benefit from one, please do not hesitate to contact me to arrange a free no obligation consultation with one of our corporate lawyers.
