When establishing a company, numerous elements come into play: the business plan, financing, the deed of incorporation... Yet, the shareholders’ agreement is often overlooked. However, this agreement can be crucial in preventing future conflicts and ensuring stable collaboration. What exactly does a shareholders’ agreement entail? And why is it indispensable? Let’s delve deeper.
Yes, I would like help!What is a shareholders’ agreement?
A shareholders’ agreement is a legal contract between the shareholders of a company. It outlines arrangements regarding their interactions with each other and with the company. This document is separate from the articles of association and offers greater flexibility, as it does not need to be made public.
Key characteristics of a shareholders’ agreement include:
Privacy: The agreement typically remains confidential among shareholders, providing additional discretion.
Supplementary arrangements: It complements the articles of association and can include provisions where the articles may lack detail.
Flexibility: Shareholders can address matters such as exit strategies, share transfers, and dispute resolution in a manner tailored to their specific situation.
Een aandeelhoudersovereenkomst is een juridisch contract tussen de aandeelhouders van een vennootschap. Hierin leggen ze afspraken vast over de manier waarop ze met elkaar en met de vennootschap omgaan. Dit document staat los van de statuten en biedt meer flexibiliteit omdat het niet verplicht openbaar moet gemaakt worden.
Why is a shareholders’ agreement important?
A well-drafted shareholders’ agreement can:
Prevent disputes: By establishing clear rules on decision-making, profit distribution, and responsibilities.
Ensure business continuity: By setting out procedures for takeovers, exits, or unforeseen events.
Offer flexibility: In situations where the articles of association may not provide sufficient guidance.
When should I draft a shareholders’ agreement?
Ideally, at the company’s inception, when all shareholders are aligned. However, it can also be beneficial to establish one later, such as during a capital round, acquisition, or internal restructuring.
What does a shareholders’ agreement typically include?
While content may vary based on shareholders’ needs, a robust agreement generally covers:
1. Voting rights and decision-making
Allocation of voting rights: Not all shareholders need equal voting power. The agreement can stipulate that certain strategic decisions require a higher majority.
Decision-making procedures: Processes for making decisions, including formal requirements and the possibility of written resolutions.
2. Share transfer
Transfer restrictions: To prevent an external party from suddenly gaining significant influence, share transfers may be restricted.
Pre-emption rights: Existing shareholders may have the first right to purchase shares before they are offered to third parties.
Approval clauses: Often, the board of directors or shareholders’ meeting must approve share transfers.
3. Capital increases and financing
Capital injections: Agreements on when and how shareholders are obliged to contribute additional capital, for instance, upon reaching growth targets.
Profit distribution: Rules regarding dividend payments and profit allocation, ensuring all parties are informed.
4. Exit strategies
Exit arrangements: Clear procedures for when a shareholder leaves the company, including the valuation of their shares.
Drag-along and tag-along rights: Mechanisms ensuring that minority shareholders are either included in a majority share sale or have the option to sell their shares alongside majority shareholders.
5. Non-compete and confidentiality clauses
Confidentiality: Provisions ensuring that sensitive company information remains protected.
Non-compete clauses: Agreements preventing shareholders from engaging in competing activities during and after their involvement with the company.
6. Governance and management
Board structure: Specific arrangements regarding the composition and powers of the board of directors or management.
Contribution of expertise: In addition to financial input, the agreement may include commitments regarding the shareholders’ knowledge and experience.
Yes, I would like help!We are here to assist you!
While not legally mandatory, a shareholders’ agreement is an essential tool for facilitating smooth and transparent collaboration among shareholders. By establishing clear agreements in advance, you can prevent disputes and create stability within your company. Consider working with our experts to draft a tailored agreement.
Do you have questions about drafting a shareholders’ agreement or determining which provisions are crucial for your situation? Seek advice from an expert to ensure your company is built on a solid foundation.
