Why Have A Shareholders Agreement

While the company`s articles of association and company law are useful to some extent, a fully thought-out and well-drafted shareholders` agreement can serve as protection and provide shareholders with greater protection against such scenarios. This can be very chaotic when starting a new business, there can be a lot of ideas and opinions that are shared in a short time. However, a shareholders` agreement should take precedence. Although it is not legally mandatory to have one, a shareholders` agreement will allow the various parties involved to establish very clear guidelines for what is expected. Before you talk to a business or management consulting firm to begin this process, here are some frequently asked questions about shareholder agreements: A shareholders` agreement is, as you might expect, an agreement between the shareholders of a company. It may be between all or, in some cases, only between certain shareholders (e.g. B holders of a certain class of shares). Its purpose is to protect shareholders` investment in the company, establish a fair relationship between shareholders and regulate how the company is run. Here are the following key benefits that I think make a shareholder agreement important: Anyone who has more than one shareholder should have this to sort out issues between them. This is often more important if there are only two of you with equal shares, because then often a blockage can occur. 2) Normally, an enterprise is subject to control under comprehensive company law (which is contained in both the articles of association and case law), which governs how a company is to be managed. However, a shareholders` agreement may include any agreement entered into between shareholders and the legal situation may vary without it.