A shareholder agreement is an agreement made between the shareholders of a specific company. All of them can be part of the agreement. But in some cases, only a number of the shareholders take part in the contract. For instance, only the shareholders of a specific class of share may be part of the agreement.
The main purpose of the shareholder agreement template is to protect the investment of the shareholders in the company. It’s also meant to establish an equal relationship between the shareholders and govern the company’s operations. When writing a shareholder agreement sample, make sure it will:
- Identify the rights and obligations of the shareholders;
- Manage the company’s sale of shares;
- Describe how the company will operate;
- Provide protection to the company and the minority shareholders;
- Define how the most important decisions will get dealt with.
shareholder agreement 04
shareholder agreement 05
shareholder agreement 11
shareholder agreement 10
shareholder agreement 09
shareholder agreement 08
shareholder agreement 07
shareholder agreement 06
shareholder agreement 12
shareholder agreement 13
shareholder agreement 14
shareholder agreement 15
shareholder agreement 16
shareholder agreement 17
shareholder agreement 23
shareholder agreement 22
shareholder agreement 21
shareholder agreement 20
shareholder agreement 19
shareholder agreement 18
shareholder agreement 24
shareholder agreement 25
shareholder agreement 26
shareholder agreement 27
shareholder agreement 28
shareholder agreement 29
shareholder agreement 35
shareholder agreement 34
shareholder agreement 33
shareholder agreement 32
shareholder agreement 31
shareholder agreement 30
shareholder agreement 36
shareholder agreement 37
shareholder agreement 38
shareholder agreement 39
shareholder agreement 40
shareholder agreement 41
shareholder agreement 47
shareholder agreement 46
shareholder agreement 45
shareholder agreement 44
shareholder agreement 43
shareholder agreement 42
shareholder agreement 48
shareholder agreement 49
shareholder agreement 50
shareholder agreement 01
shareholder agreement 02
shareholder agreement 03
A shareholder agreement template contains important, practical, and specific rules which are directly related to the company and to its shareholders. Making such a document is very beneficial for all types of shareholders. Let’s take a look at just how important this document is:
- For minority shareholders
A minority shareholder is one who owns less than 50% of the total shares. More often than not, this type of shareholder doesn’t have a say or control in terms of the company’s operations. Therefore, the control of the company often rests with only one or two of the shareholders.
Generally, companies operate based on majority decisions. This happens even if any articles of association include provisions which protect the minority. But you can change this decision through the special resolution of holders owning 75% of voting shares. There are laws which offer minimal protection to minority shareholders. However, enforcing these can be quite costly.
If you’re a minority shareholder and you have a shareholder agreement sample which includes the need for all of the shareholders to approve of decisions, this guarantees that you have a vote with regards to significant decisions which affect the company. Such decisions may be:
the issuance of new shares;
removal or appointment of directors;
making changes in the main trade; or
accepting new borrowings.
Of course, the decisions will only get approved if the shareholders have a unanimous decision. Otherwise, this might cause issues which, in turn, prevents your company from running smoothly.
Minority shareholders may want to include provisions which state that if someone wants to purchase a majority shareholder’s shares, that particular shareholder may only sell his shares if the buyer gives the same offer to all shareholders, even the minority ones.
This is also known as the “tag along provision.” This is a beneficial provision for minority shareholders because it guarantees that they receive the same ROI as all of the other shareholders.
- For majority shareholders
There are some cases where a majority shareholder plans to sell his shares but one of the minority shareholders isn’t willing to agree. In such a case, it’s important to include a provision in the shareholder’s agreement form which forces the shareholder to sell his shares and this is what’s known as the “drag along provision.”
This provision permits the majority shareholder to realize his investment at a specific price and time when he deems appropriate. Of course, the price along with the other payments involved in the sale must be completely fair for all the other shareholders, even the minority ones.
Furthermore, a majority shareholder may prefer to prevent the minority shareholders from sharing confidential information about the company to competitors in the business. Neither would they want these minority shareholders to set up rival companies. Include all of these as provisions in the shareholder agreement.
Another major concern is the fact that minority shareholders may choose to transfer their shares to other people. This causes issues for other shareholders, especially in cases where the shareholders sell their shares to people who shouldn’t be part of the company such as competitors.
However, forcing a shareholder who isn’t satisfied might cause even more problems compared to having a new shareholder who wants to see the company succeed. It’s important for all shareholders to get along well with each other and stand together for the benefit of the company.
This is why shareholder agreements must include rules and provisions about transfers and sales of shares. There should also be information on who they can transfer the shared to, the terms of transferring or selling, and the price of selling.
- For equal shareholders
In such a case, it’s important for your agreement to have a provision for dispute resolution. This is essential in case you and your partner fall out and head to the mediation or the court of law. Without any procedure for the resolution of disputes, you have no way of making decisions which, in turn, causes a lot of problems for the company which hurts its overall image.
A shareholder agreement is a legally binding document which exists between a company’s shareholders. This document determines the protections, privileges, and rights of the said shareholders. You can use this agreement to:
- protect the investments of the shareholders,
- create a safe relationship among the shareholders,
- to map out the company’s operations.
A shareholder agreement template provides certainty and clarity with regards to what you can or can do in the company. Also, it includes a provision which states that you must base all decisions by discussion and consensus. Although this document isn’t a “legal requirement,” it’s still highly recommended to create one to prevent any conflicts in the future.
Moreover, since this agreement is a private document, you don’t have to place it along with the company’s files. But all the shareholders involved in the company must have a copy of the agreement to keep with their personal files. This ensures the confidentiality of the terms and conditions written on the agreement.
A shareholder’s agreement form is the cornerstone of any kind of business venture between the founders and the partners. It contains relevant information about the shareholders. Generally, the document must contain clauses about:
- who’s considered a shareholder in the company;
- assignment of intellectual property;
- dilution rights;
- classes and shareholdings of the shares for each of the shareholders;
- the compulsory share transfer if a tragedy happens;
- policies regarding dividends;
- powers of voting;
- provisions for reverse vesting;
- pre-emptive rights; and
The terms of this document must result in:
- the shareholders retaining the rights to make decisions;
- a better sense of direction;
- a resolution of the issue of equity and shares;
- a policy on flexible dividends;
- employee/shareholder relations;
- the protection of minority and majority shareholders; and
- the resolution of disputes.
It’s highly advisable to put the agreement in place upon the formation of the company and the issuance of its very first shares. You can use it as a positive step to guarantee that you and the shareholders are all on the same page when it comes to the business.
At this point, the shareholders must have a similar idea of what they get and what they offer to the company. If there exist any differences between the shareholders at this stage and they don’t want to take part in the agreement, take this as a warning. You might also experience difficulties with such people in the future.
Sometimes, investors may delay this agreement, especially when they want to establish the company first. In such cases, make sure to get back to the task of creating the agreement when you have more time on your hands. No matter how many issues come up, it’s important to create this agreement to protect your shareholders.
Just like any other contract, you have the choice to terminate a shareholder agreement. You can do this in 3 different ways:
- Mutual termination
This is the first way you can terminate the agreement. Here, all of the involved shareholders must unanimously agree to no longer comply with the terms of the agreement even if they have different reasons. Sometimes, the shareholders just want to sell their shares, the company might get dissolved soon, and more. Therefore, you must include such provisions in the document.
- Automatic termination
This happens when a breach by any of the shareholders happen. In such a case, the agreement gets automatically terminated unless it contains clauses which set out some type of resolution or mediation.
- Leaving the company
If one of the shareholders decides to leave the company, the agreement may get terminated. In such a case, there are specific provisions which describe what must happen.
PS. Sometimes all that’s needed is a form, document or tip that can solve problems or issues that repeat in your life or business. To save you from unnecessary legal costs by hiring lawyer(s), here are customizable smart templates/forms that you can use as often as you need; flexible enough to allow for changes without leaving you exposed.
In many cases, when visiting our website, you will be able to solve your legal and business problems in 20 minutes without ever contacting even our lawyers! You can of course do it the old-fashioned way if you prefer, but it’s much more fun doing it remotely and saving you costs! If you need our help, kindly follow the following instruction:
For our ONLINE legal and business services, please follow this instruction:
- click the following website link, www.raynessanalytica.com.
- once on the website’s homepage, an ONLINE brown chat box will appear at the right bottom end of screen;
- click on the chat tab, insert NAME, EMAIL and PHONE NUMBER; and
- proceed when ready, letting us know the issue(s) and eliciting HELP from our lawyers and business specialists.
Click the following links below to search for the desired template, download it and embark on your great legal adventure – and don’t forget to bring the bug spray. For each template, we have numerous different customizable documents.
Our aim is to facilitate resolution of legal and business problems in twenty minutes without ever contacting even our lawyers. The old-fashioned way works, too, but it is ever so much more fun doing it remotely without incurring legal fees.
FREE DOWNLOADABLE LEGAL TEMPLATES
FORMS & REPORTS
Our passion to help people and business owners succeed inspired us to come up with these high-quality, customizable documents. The core idea has always been to provide a service that offers a big bang for the buck. (Translation: HUGE value for a small price.) Note: We charge a small fee, specific to the type of document, to customize the template.
Go to the “Order Now” page and make a request.
We look forward to addressing your concerns and earning your trust and confidence in us!
Someday everyone will be doing it Our Way. We’re doing it Now!
The Centre in [East] Africa for Legal and Business Élites
🇰🇪 Kenya’s E-Lawyers and Business Specialists 🇰🇪