If you are starting a business with partners, it is crucial to have a shareholders agreement in place. A shareholders agreement outlines the rights and responsibilities of shareholders and helps avoid disputes in the future. In this article, we will provide a summary of what a shareholders agreement is and what it should include.

What is a Shareholders Agreement?

A shareholders agreement is a legal document that outlines the rights and responsibilities of shareholders in a company. This agreement is specific to the company and its shareholders and is not required by law. However, it is highly recommended for companies with multiple shareholders.

What Should a Shareholders Agreement Include?

1. Shareholders` Rights and Obligations

The shareholders agreement should outline the shareholders` rights and obligations in the company. This includes the right to vote, sell shares, and receive dividends. It should also outline the obligations of the shareholders, such as attending meetings and contributing capital.

2. Management of the Company

The agreement should outline how the company will be managed, including the appointment of directors and their duties. It should also specify the decision-making process for important matters, such as the approval of major contracts or the sale of assets.

3. Transferring Shares

The agreement should include restrictions on the transfer of shares. This may include a right of first refusal, which gives existing shareholders the opportunity to purchase any shares that are being sold before they are offered to outside parties.

4. Dispute Resolution

The shareholders agreement should outline how disputes will be resolved between shareholders. This may include a mediation or arbitration clause.

5. Termination of the Agreement

The agreement should outline how it can be terminated and the consequences of termination. For example, it may specify that the company must be dissolved or that the remaining shareholders must buy out the departing shareholder.

Conclusion

In summary, a shareholders agreement is a document that outlines the rights and responsibilities of shareholders in a company. It is essential for companies with multiple shareholders as it helps avoid disputes and provides clarity on the management of the company. The agreement should include shareholders` rights and obligations, the management of the company, restrictions on transferring shares, dispute resolution, and the termination of the agreement.