A shareholders' agreement is a crucial document that governs the rights and obligations of a company's shareholders. It is essential in the startup phase of a business as it lays the foundation for cooperation between investors and founders, providing a guideline for resolving potential disputes. Here are some key points to consider when drafting a shareholders' agreement:
Shareholders' rights and obligations
Describe the rights and responsibilities of the shareholders, including voting rights, the right to information, confidentiality obligations, and restrictions on the sale of shares.
Decision-making and voting rights
Specify how major decisions are made and how voting rights are exercised. Determine whether unanimity is required for certain decisions or if a majority vote is sufficient.
Vesting of shares
Consider implementing a vesting schedule for founders or key team members. This ensures shares are gradually awarded over a specified period, encouraging continuity and commitment.
Valuation of shares
Establish mechanisms for determining the value of shares, especially during share sales or investment rounds. Methods such as a predetermined formula, independent valuation, or a deferred arrangement can be considered.
Exit strategies
Contemplate scenarios where shareholders wish to sell their shares. Should other shareholders have the right to buy these shares before they are sold externally? Or should there be restrictions on who can acquire shares?
Non-compete clauses
Consider clauses preventing shareholders from establishing competing businesses or joining competitors for a certain period after leaving the company.
Dispute resolution
Determine how disputes among shareholders will be resolved, ranging from mediation and arbitration to legal proceedings. Having a dispute resolution procedure in place can prevent costly and time-consuming lawsuits.
Share transfers
Regulate the transfer of shares to prevent shares from being transferred without consent from other shareholders. This can ensure necessary control and stability within the company.
Board structure
If shareholders have powers regarding the appointment of board members, outline how these appointments are made and the responsibilities of the board.
Amendments to the agreement
Consider how and under what circumstances the agreement can be amended and what shareholder approval is required.
A shareholders' agreement is a complex document that needs to be tailored to the specific company and parties involved. Seeking legal advice when drafting it is wise to ensure all key points are accurately included, and the document is legally valid. A well-thought-out shareholders' agreement can help prevent future conflicts and ensure the smooth operation of the company.
Conclusion
Share Council is ready to support your company in setting up various legal structures to enhance employee participation. In an exploratory conversation, we would like to discover together with you which options best suit your company and how we can assist. Contact us, and let's explore the possibilities to advance your business together.
