Often, shareholders invest in a new business when the business plan is not yet fully formulated. If this is the case, a shareholders` agreement requires directors to obtain “consent” from all shareholders to the manufacture or amendment of the business plan. It`s important to take the time to know exactly what you mean in a shareholders` agreement. If the articles of association can be amended by a majority of 75% of the shareholders, the modification of the shareholders` agreement requires an agreement of 100% of the shareholders. Trying to get 100% of shareholders to agree on changes can be a long process and it is more useful to make your agreement correctly the first time. When capital is raised that brings in new shareholders or when an existing shareholder transfers shares to third parties in different ways (including family members), those shareholders must be related to SHA. To do this, a SHA should clearly stipulate that any new shareholder or buyer must be part of the SHA before receiving the shares. This can be done by requiring such a purchaser or a subsequent share buyer/investor to sign a document in the form of an deed in which he agrees to be bound by all the terms of the SHA. Such a document is an “instrument of accession” or an “instrument of accession”. Another concern is where a minority shareholder could transfer their shares to anyone. This could create problems for other shareholders, especially when the sale takes place to a competitor or other person that the other shareholders do not wish to associate with the company.
But conversely, forcing an unhappy shareholder to stay can cause more problems than having a new unknown shareholder interested in the company`s success. All shareholders must agree for business to prosper. To overcome these problems, shareholder agreements often contain rules relating to the sale and transfer of shares – to whom shares can be transferred, under what conditions and at what price. A shareholders` agreement often defines things that the company should not do without first obtaining the agreement of all the signatories. Through an agreed list of reserved questions, shareholders have the option to veto certain transactions if they believe they affect their investment in the business. Most reserved positions are things that fall under the jurisdiction of a board of directors (i.e. not the shareholders) without reference to the shareholders. It is therefore necessary to find a balance, because if the list of reserved questions is too long, it could hinder the day-to-day management of the company.
We have also prepared a model shareholders` agreement that contains all these default rules that you can buy and download. The shareholders` agreement is a contract between all the parties who sign it and gives rights and obligations to those who become stakeholders in the company. It is a foundation on which a solid business can be built, and it will protect the interests of all parties involved if properly written. . . .