Despite the benefits of providing equity to creators and employees, problems arise when shareholder relations collapse and people are fired from the company. In the absence of a valid legal agreement to deal with this event, these «bad Leavers» will keep their shares and the remaining shareholders will be blocked with minority shareholders who are now «parasitic» on the efforts of the shareholders actively involved. While there are some legal «tricks» that majority shareholders can use to solve this problem (for example. B issuing additional shares to dilute shareholders or selling business assets to a new entity ), these grounds can create legal action and, ultimately, the company may have difficulty raising additional funds and incentivizing other founders and employees to stay connected to the company. An SHA may contain terms found in the statutes; However, a SHA is generally larger and offers greater protection to shareholders. There is no standard form that makes SHAs flexible to meet the specific needs of shareholders. Articles and ASAs are often complementary. In many jurisdictions, the articles of association can only be amended by a special decision (75% or more of the shareholders present and voting at a general meeting). However, a SHA often requires unanimous agreement for its revision, but may also require the approval of the super-majority (a number of votes well in excess of half of the voting shares, but less than 100%). Shareholders` obligations: All contracting parties have clearly defined their roles and obligations. The composition of the Board of Directors can also be indicated here. The relationship between minority and majority shareholders, as well as the board of directors and other shareholders, must also be monitored. Transfer or transfer of shares: Another important clause of a shareholder contact is the limitation of the transfer or sale of shares by the partners.
This protects the interests of the company and limits shareholders to transfer or sell the shares to a third party before the company finds a desired buyer of those shares or gives existing shareholders the opportunity to buy them. A shareholder agreement (SHA) is a contract between the shareholders of a company and often the company itself….