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WHEREAS, _________________________ referred to hereafter as SHAREHOLDERS, are the owners of a total of ______ shares of ______ stock of __________________________. And they desire to agree to certain actions to be taken to protect the value of their holdings, IT IS AGREED:
That ___________, whose address is ______________________________, a charter signatory to this agreement, shall act as the SECRETARY of this agreement.
All future purchases of the same class stock by the signatories to this agreement shall also subject the newly purchased shares to this agreement. The SECRETARY of this agreement shall be notified of any future purchases of shares.
In the event that the CORPORATION shall reorganize or recapitalize, then the agreement shall continue into force with the security or securities issued in lieu of this class being subject to the agreement.
If any SHAREHOLDER transfers his shares, the SHAREHOLDER shall be required to have the transferee execute this agreement. All shares subject to this agreement shall be conspicuously endorsed with the following legend:
“These shares are subject to restrictions contained in a shareholders agreement dated ________________________________. A copy may be obtained from ___________________, whose address is _______________________________________________________.”
All signatories to this agreement shall notify the SECRETARY of any transfer, and provide a full copy of the documents of transfer to the SECRETARY.
All shares subject to this agreement shall be voted for the following candidates for the offices stated:
_____________________________________________________________
_____________________________________________________________
In the event that the individuals set forth above are unwilling or incapable of serving, then a vote of the shareholders shall be taken for new candidates, all of whom shall be signatories to this agreement, then holding stock in the CORPORATION. A ______________ ________ vote shall be necessary with votes being counted by _____ vote per share owned on voting date by the party voting.
In the event of failure to obtain a majority, a run off will be held among the top two finishers.
In the event that no signatory is willing or eligible to serve, and all signatories decline to run, a non-signatory may be nominated, and elected by a simple majority with votes being counted by ___ vote per share owned on voting date by the party voting.
The parties hereto agree that they shall not sell any of the shares covered by this agreement unless it is at a minimum price of $______(_______&___/100 dollars) per share. In the event of a recapitalization, the price shall be adjusted so that equivalent units of stock are subject to the same minimum price as stated above.
In the event that any shareholder desires to sell any part of their holdings to an individual not a signatory to this agreement, they shall obtain such bona fide offers as they may desire, and report the offers in writing to the SECRETARY, and shall mark the offer which they desire to accept. The SECRETARY shall then notify all of the signatories of the proposed offer, and any signatory shall be entitled to a right of first refusal to purchase the shares on the same terms as the accepted offer within _______. In the event that more than one signatory is desirous of purchasing the shares shall be sold pro-rata to each shareholder desiring to purchase the same.
The signatories shall all vote against that certain merger or asset purchase subject to the approval of shareholders proposed by ____________________ and any additional offers made by _______________.
This agreement shall be binding upon the successors of the signatories.
Dated: ____________________________________
___________________________________________________
Signed by all shareholders
_______________________ _________________________ _____________________
Shareholders AgreementReview List
This review list is provided to inform you about this document in question and assist you in its preparation. This is a reasonably straightforward shareholders agreement that can be modified to your purposes. Be sure each shareholder signs a copy and you have it for your corporate records.
1. Make multiple copies. Keep one in each shareholders file.
What else can I help you with?
What are the differences between formal and informal shareholders agreement?
what is formal and informal shareholders agreement
Does a partnership have shareholders?
Generally, no. The partners would hold 'equal shares', however, some other split may be agreed upon which would be in the Partnership Agreement.
What is the maximum number of stockholder in a corporation?
In theory, it is unlimited. The Shareholders' Agreement will state if there is a limit to the number of common (or other) shares that can be issued, but oftentimes, a corporation will be permitted to issue an unlimited number. At any given time, you can have as many shareholders as the quantity of stock issued (1 share per person).
What happens to unvested shares in an acquisition?
Unvested shares in an acquisition typically become subject to the terms of the acquisition agreement. This means that the acquiring company may choose to either convert the unvested shares into shares of the acquiring company or provide some form of compensation to the original shareholders.
Why is share of common stock an asset for its owner and liability for corporation?
A single share is a part of capital of the company so if anybody purchase the share of company that person is investing in the share capital of company and providing the company necessary money to operate that's why it is the investment of the owner of share which is called then the shareholder of company and that shares becomes the asset of the shareholders and while company is acquiring capital in the shape of shares that's why it is the liability of the corporation to pay back that amount of money back to the shareholders at certain time or at liquidation as written in the agreement to raise the capital through share issue.
What are the differences between formal and informal shareholders agreement?
what is formal and informal shareholders agreement
What are the key legal documents every startup should have?
Employment Agreement Ip Assignment Shareholders Agreement
What is a Shareholders’ Agreement?
A Shareholders’ Agreement stands as a foundational document governing the relationships and operations within a company, particularly focusing on the interactions among its shareholders. This comprehensive legal instrument plays a crucial role in providing clarity, structure, and guidelines for various facets of corporate governance. In the context of India, where corporate entities are thriving and dynamic, the significance of a well-crafted Shareholders’ Agreement cannot be overstated.
How does a Shareholders Agreement protect minority shareholders in India?
A Shareholders Agreement protects minority shareholders in India by including provisions that prevent majority shareholders from making unilateral decisions that could harm minority interests. This can include veto rights on certain decisions, special voting requirements, and clauses that ensure minority shareholders have a say in key company decisions. Additionally, it may include tag-along rights, allowing minority shareholders to sell their shares under the same conditions as majority shareholders if a major sale occurs.
What is the importance of Shareholders' Agreement?
Structural Framework: A Shareholders’ Agreement serves as a structural framework that outlines the rights and responsibilities of each shareholder within the company. It delineates the roles of major and minority stakeholders, providing a blueprint for efficient decision-making processes. Dispute Resolution: One of the key features of a Shareholders’ Agreement is its ability to address and mitigate potential disputes among shareholders. By establishing clear mechanisms for conflict resolution, the agreement acts as a preventive measure, fostering a harmonious and collaborative business environment. Protection of Minority Shareholders: In India, where diverse ownership structures are common, the protection of minority shareholders becomes paramount. A well-drafted Shareholders’ Agreement includes provisions that safeguard the interests and rights of minority shareholders, ensuring they have a voice in significant corporate decisions. Decision-Making Processes: The agreement delineates the procedures and criteria for making critical decisions within the company. This includes specifying voting rights, approval thresholds for major transactions, and protocols for electing or removing key executives. Business Operations: From the allocation of responsibilities to the day-to-day operations of the business, a Shareholders’ Agreement provides a roadmap for how the company will be managed. It addresses matters such as hiring and firing executives, financial management, and strategic planning.
What is the Legal effects of shareholders agreement after the company is to be registered?
http://wiki.answers.com/Q/What_is_the_Legal_effects_of_shareholders_agreement_after_the_company_is_to_be_registered"
What is the difference between a partnership agreement and shareholders agreement?
A partnership agreement governs the relationship between partners in a partnership, outlining responsibilities, profit-sharing, decision-making processes, and procedures for resolving disputes. In contrast, a shareholders agreement is specific to corporations and details the rights and obligations of shareholders, including share ownership, voting rights, and procedures for transferring shares. While both agreements aim to clarify roles and expectations, their applicability and focus differ based on the business structure involved.
What are the risks of being a stockholder?
10 common risks associated with shareholders agreements.1. Failing to have a Shareholders AgreementWhether a person or entity is becoming a shareholder in a new company or an existing company, they should be mindful to check whether there is a shareholders agreement.In the absence of a shareholders agreement, shareholders will need to rely solely on the company’s constitution to set out all of the administrative processes – if the constitution has been prepared in a mostly pro-forma or standard form, it is unlikely that it will provide all that is needed.2. New ShareholdersIt is important to ensure that a company’s constitution or a shareholders agreement provides that any new shareholder entering into an existing company is obliged to enter into and be bound by the terms of the shareholders agreement.There is more than one way that this can be done. The constitution can provide that the company only registers a transfer of shares if a deed of accession has been signed by the incoming shareholder and provided to the company.3. Restrictions on Company’s PowersThe terms of a shareholders agreement cannot act to limit the corporate powers of a company under the Corporations Act 2001 (Cth) (Act). If a term within a shareholders agreement is deemed to limit such powers, then it is likely to be void.Anyone involved in the preparation of a shareholders agreement should be mindful of the powers given to a company under the Act when completing a shareholders agreement.4. Restraint of TradeIt is common with small to medium sized companies, where the shareholders also hold director or employee positions, that restrictions are included within the shareholders agreement on the types of activities and work that the shareholders can complete, to limit the risk of any shareholder undertaking activities that compete with the company – this can be both whilst the person remains a shareholder and for a period after they cease to be a shareholder.Without the inclusion of this type of clause, there is a risk of dispute particularly when a person ceases to be a shareholder and seeks to start or work in a competing business. Any clause restraining a person’s activities needs to be carefully drafted to ensure that the correct entities are restrained, and so that the clause is enforceable if needed.5. Management Decisions and Shareholder ObligationsDepending on the type, size and nature of the company the shareholders may wish to retain a level of control and involvement in the management and operation of the company.Shareholder involvement in the company’s management is unlikely to be addressed in a standard constitution, so if this is a specific concern of a particular shareholder or group of shareholders, it needs to be set out in a shareholders agreement.There are different ways of addressing this issue within a shareholders agreement, none of which are standard and will depend on the nature of the company’s business and the expectations of the shareholders.6. FinancialsIf any shareholder or prospective shareholder wants to have control over certain financial decisions or be provided with business plans or other financial projections at any time, a standard constitution would not generally include this right. A shareholders agreement can be used to state which decisions need to be referred to the shareholders, eg for decisions with a liability or cost in excess of a set amount.If the shareholders want these types of rights in relation to decisions, but a shareholders agreement has not been entered into or has not been drafted specifically to cover off on this type of concern, then the company could make decisions that are not in line with the intentions of the shareholders.7. CapitalThere is more than one circumstance in which capital investment becomes a consideration for a company.Where there is a start-up company, it will usually seek initial funding, which is generally as cash in exchange for the issue of shares. However, it is important to remember that not all shareholders provide cash as consideration for shares.8. Issuing or Transferring SharesA company’s constitution often details the process for issuing or transferring shares. Depending on the provisions included in the constitution together with the circumstances of the shareholders involved, it may be that the process needs to be further set out, or additional circumstances may need to be provided for in a shareholders agreement.9. Dispute Resolution:One of the main advantages of a shareholders agreement is to include a process to resolve a deadlock or dispute between shareholders.10. Consistency with Constitution:It is important that any shareholders agreement is drafted with careful consideration of the matters that are addressed within the company’s constitution, so that the two documents governing the company’s affairs and the relationship between the shareholders are not inconsistent with each other.
What are the benefits of a Shareholders’ Agreement?
Risk Mitigation: A Shareholders’ Agreement acts as a risk mitigation tool by addressing potential conflicts and disputes before they escalate. This proactive approach contributes to the overall stability and sustainability of the business. Legal Clarity: Providing a legally binding framework, the agreement offers clarity on the rights, responsibilities, and expectations of each shareholder. This not only minimizes legal uncertainties but also establishes a foundation for the company’s growth. Flexibility and Adaptability: A well-crafted Shareholders’ Agreement is adaptable to the evolving needs of the business. It can be amended or revised to accommodate changes in the company’s structure, ownership, or external business environment. Protection of Minority Interests: For minority shareholders, the agreement serves as a safeguard by clearly outlining their rights and ensuring their interests are protected. This is particularly crucial in diverse ownership structures prevalent in the Indian business landscape. Facilitation of Funding and Investment: Investors and financial institutions often require a clear governance framework before investing in a company. A robust Shareholders’ Agreement enhances the company’s credibility and facilitates external funding.
What are the key components of a Shareholders Agreement in India?
The key components of a Shareholders Agreement in India typically include: Shareholder Rights and Obligations: Details on voting rights, dividend entitlements, and management roles. Management and Decision-Making: Structure of the company’s management and the powers of directors. Share Transfer Restrictions: Clauses on pre-emption rights, right of first refusal, and drag-along/tag-along rights. Dispute Resolution Mechanisms: Procedures for resolving disputes among shareholders. Protection of Minority Shareholders: Provisions to safeguard minority interests. **Exit Strategies:** Buy-out clauses and paths for shareholders wishing to exit the company.
What are some key components that should be included in a Shareholders Agreement?
Key components of a Shareholders Agreement include: Purpose and Objectives: Stating the company's purpose and the shareholders' objectives. Capital Contribution: Details of initial and future capital contributions by shareholders. Share Transfer Restrictions: Rules governing the transfer of shares, such as right of first refusal and tag-along rights. Board Composition: Guidelines for appointing, removing, and defining the roles of directors. Dividend Policy: Policies regarding profit distribution. Exit Strategy: Conditions under which shareholders can exit, including buy-out clauses and valuation methods. Dispute Resolution: Mechanisms for resolving conflicts, such as arbitration and mediation. Confidentiality and Non-Compete Clauses: Provisions to protect confidential information and prevent shareholders from engaging in competing businesses.
Does a partnership have shareholders?
Generally, no. The partners would hold 'equal shares', however, some other split may be agreed upon which would be in the Partnership Agreement.
