Corporate Shareholders’ Agreements address the rights and responsibilities of the shareholders towards each other and the company, the restrictions and preferences associated with different class of stock if any, methods and procedures of taking actions related to the share ownership, company management, exit strategies, warranties and other matters, which may affect business operations. This agreement must be extensive and detailed to cover the interests of all parties and all possible future developments. The most common provisions
Management Provisions
Board of directors
Director and shareholder meetings
Voting arrangements
Deadlock
Subsidiaries
Transfer of Interest
Restriction on transfer
Right of first refusal
Drag-along rights
Tag-along rights
Pre-emptive rights
Anti-dilution
Valuation
Payment terms
Co-sale
Non-compete and other agreements
Non-compete
Confidentiality
Corporate opportunities
Information Rights
Financial statements
Inspection rights
Representations and warranties
Terms and termination
Release of liability
Reimbursement of expenses
Successors and assigns
Third-party beneficiaries
Governing law and jurisdiction
Dispute resolution procedures
Dissolution
Shareholder agreements usually apply not only to the present shareholders but future ones as well. Attorneys include the provision stating that in case of interest transfer the transferee must sign an agreement to accept the corporation’s shareholder agreement. It ensures that interest of the present shareholders will not be affected by any future transactions. The shareholder agreement is one of the most important documents of the company and accordingly should only be drafted by an experienced business attorney. There are no sample documents that cover all possible interests of the parties and protect from all possible liabilities. The danger with forms that are available for download online is not that they may contain legally unsound provisions, but that they are extremely limited. A person, who is not a business attorney, is able to see only what is included there, but cannot know what else is available, foresee all possible consequences, and fully understand legal interpretations under existing corporate statutes and legal precedents. It is strongly advised to discuss the nature of the business and interests of its owners with an experienced business lawyer.