What to include in a shareholders agreement?
A shareholders agreement, like all other agreements, is in principle free of form. This means that you can decide for yourself what you do and do not include in the shareholders agreement. However, we at Blatter Legal advise you to always include the following matters in the shareholders' agreement:
- Dividend payment: dividend is the amount of money that is paid to the shareholders. In the shareholders agreement you can stipulate whether all or part of the profits will be paid.
- Competition clause: it may occur that one of the shareholders himself runs a company in the same sector as the company in which this shareholder holds shares. In that case, it is wise to include in the shareholders agreement how the competition is dealt with: for example, may the shareholder approach customers of the company in which he owns shares?
- Confidentiality clause: a shareholder often has access to sensitive company information. The shareholder agreement regulates how the shareholder should handle this information. For more information on this subject, see also the page on: non-disclosure agreements.
- Forced transfer: the shareholder agreement can also include situations regarding the forced transfer of shares. Think of a shareholder who is ill for a long period of time, or the case in which a large part of the shares is sold to an acquirer who wishes to take over the entire company.
Failure to comply with the shareholder agreement
If you or any of the other shareholders fails to comply with the provisions of the shareholders agreement, the usual contractual remedies will apply, namely: i) dissolution, ii) claim performance or iii) claim damages.
In addition to these usual remedies, you can also choose to attach more specific consequences to non-compliance with certain clauses in the shareholders agreement, like the obligation to offer (a part of) the shares to the company or other shareholders.
Need help with a shareholders agreement?
Would you like support in drawing up and negotiating a workable and legally clear shareholders agreement? Or are you dealing with a dispute about or termination of a shareholders agreement? Our legal experts will be happy to assist you. Please feel free to contact us for more information.