What is a Shareholders Agreement?
A shareholders agreement is exactly that; an agreement between the shareholders of a company. There is no requirement that a shareholders agreement must contain particular information or deal with particular shareholder matters. However, most shareholder agreements cover at least some of the matters outlined in this guidance.
A typical shareholders agreement will have the following aims:
- To protect the shareholders’ investment in the company;
- To establish and record an agreed relationship between the shareholders;
- To record the shareholders’ intentions for the company; and
- To promote the smooth running of the company.
- The above aims translate into an agreement containing very specific, important and practical rules relating to the company and the relationship between the shareholders.
The key provisions in a shareholders agreement are arguably those relating to the:
Sale of Shares
A shareholders agreement can regulate the sale of shares in the company, including provisions to prevent undesirable third parties acquiring shares.
These provisions primarily protect shareholders who hold less than 50% of the shares in the company, giving them more input into fundamental decisions.
The rest of this guide sets out the contents of a typical shareholders agreement in detail, including the provisions outlined above.