Shareholder Agreement Key Terms

Here are some important practical thoughts on shareholder agreements that founders should follow. A shareholders` agreement consists of the following basic provisions: transfer restrictions are provided for to protect the company and other shareholders against undesirable third parties who may become shareholders or to protect the company, if an existing shareholder violates his duty to the company or puts himself in a situation likely to seriously damage the reputation of the company. Shareholders often have access to trade secrets, standard work instructions, customer and source lists, research and development, financial details, and other sensitive or confidential information. A SHA may contain confidentiality and non-competition clauses that require shareholders to respect secrecy and prevent them from working for, with or on behalf of competitors or other parties that may harm the interests of the company. In addition, this language may also include a no-pocher clause that prevents or prevents a shareholder from doing business with a company or a person who was or is a customer of the company. The agreement contains sections that set out the fair and legitimate pricing of shares (especially when selling). It also allows shareholders to make decisions on external parties likely to become future shareholders and offers protection for minority positions. A shareholders` agreement includes a date, often the number of shares issued, a capitalization table (or “cap”), which indicates the shareholders and their percentage of ownership, any restrictions on the transfer of shares, the subscription rights of current shareholders to purchase shares (in the event of a new issue to maintain their ownership share) and details of payments in the event of the sale of a business. While a SHA and a statute should not contradict each other, a SHA may contain a priority clause to ensure that the SHA suspends the articles (in the event of inconsistency, shareholders may amend the articles accordingly). As the articles follow a legal model, they are not able to deal with matters that are personal to shareholders, as this would relate to the legal powers of the company. Conversely, a SHA can look at all aspects of the relationship between shareholders and deal with some unique issues for those shareholders or for that company, and even indicate other agreements to be concluded between the individual shareholders and the company, such as. B directors` employment contracts, management agreements and technology transfer agreements (e.g.

B intellectual property licenses, B.B. patents, trademarks or copyrights) among others. Shareholder agreements vary considerably from country to country. However, in the case of a characteristic joint venture or business creation, it is generally expected that a shareholder agreement will address the following issues: In the event of a voluntary transfer, the selling shareholder must ensure that the conditions for the purchase of the offer for the purchase of its shares are extended to the other shareholders in relation to their respective shareholdings. . . .