Shareholder agreements govern the relations among shareholders in privately held firms, such as joint ventures or venture capital-backed firms. An explanation for the use of put and call options, tag-along rights, drag-along rights, demand rights, piggy-back rights, and catch-up clauses in shareholder agreements. We view these clauses as serving (1) to induce the parties to make ex ante investments, (2) to preclude a party from engaging in ex post transfers, and (3) to achieve the efficient ex post allocation of stakes in the firm. Shareholder agreements specify the rights and duties of shareholders when those prescribed by law and regulation are thought not to be appropriate. Shareholder agreements are used mostly by companies with at least some shareholders actively involved in the management of the company.

What is the structure of the company and how is equity divided among shareholders? Should the agreement be unanimous and involve all (or just some) of the shareholders? Who owns or will own shares the parties to the agreement. Are there vesting provisions shares may be subject to cancellation is a shareholder/manager quits. Are shareholders allowed to pledge or hypothecate their shares? Who is on the Board? What about outside board members? Who are the officers and managers? What constitutes a quorum for meetings? What are the restrictions on new equity issues, e.g. anti-dilution aspects, pre-emptive rights and tag-along provisions? How are ownership buyouts to be handled? (e.g. shotgun clause approach versus voluntary sale approach). How are disputes to be resolved among shareholders arbitration clause? How are share sales handled? e.g.

first right of refusal. What are shareholders' obligations and commitment? What are shareholders' rights? What information, financial statements, reports, etc. can shareholders access? What happens in the event of death/incapacity? How is a share valuation determined to buy out an estate in the event of death is life insurance required? Funding for purchase of shares from estate or for key person insurance. What are the operating guidelines or restrictions (budget approvals, spending limits banking, etc. What types of decisions require unanimous board and/or unanimous shareholder approval? Compensation issues - remuneration of officers & directors, dividend policies are other agreements required as well, e.g. management contracts, confidentialit

y agreements, patent rights, etc? Should there be any restrictions on shareholders with respect to competing interests? What could trigger the dissolution of the business? What is the liability exposure and is there any corporate indemnification (and insurance)? Who are the company's professional advisors (legal, audit, etc.)? Are there any financial obligations by shareholders (bank guarantees, shareholder loans, etc)?
Shareholders' agreements, properly structured and funded, are a critical part of any business with more than one shareholder. A well-thought-out agreement provides an orderly way to transfer shares in the business and helps keep the business running smoothly in the face of future events such as death, disability or retirement of a shareholder.

These agreements generally establish a purchaser for the shares of the deceased or existing shareholder, a formula for determining the purchase price of the shares, and a method for funding the purchase. A venture capitalist who does not acquire control with his purchase of company stock will usually require a shareholders' agreement as a condition of funding. Management that sells a controlling interest in its company's common stock normally insists upon a shareholders' agreement to ensure its continued ability to run the company.
Shareholders' agreements often contain other provisions affecting management and its relationship with its investors. These provisions commonly contain limitations on the manager's ability to sell his shares to outsiders and provide for the disposition of his shares in the event of his death or termination of employment.

Shareholders' agreements are also commonly used for estate planning purposes. Management should consider shareholders' agreements carefully. They should have a limited term and, in most cases, should terminate in the event of a public offering of the company's stock or sale of the company.
Our Shareholders Agreement can be used where two or more parties wish to carry on business together as a limited company and wish to regulate the relationship between shareholders and determine actions in the event of deadlock. It is suitable for a group of shareholders working together who wish to arrange for particular management decisions (relating to the structure of the company) to be taken unanimously and allows each shareholder to appoint one director.

You can insert the names and details of the parties involved, and the wizard will format the document accordingly.
A bankrupt person may not be appointed as a director. If a director becomes bankrupt after appointment, he must immediately resign as a director unless leave to continue is given by the courts. A person who has had a disqualification order made against him may not act as a company director. The auditor of a company cannot also be a director or company secretary of that company. A director of an insolvent company cannot, without the leave of the court, be appointed as a director of a company with a prohibited name. The company secretary cannot also be the sole director of the company. A director aged over 70 may not be appointed to a public company or a subsidiary of a public company.

This exclusion can be overcome if the company's Articles exclude Table A, Regulation 81 and the appointment is approved by the shareholders of the company. In addition the Act and Articles of Association may provide further instances where appointment may not be made or may cease.

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