Dec 11, 2020 / by OsmondMarketing / No Comments

Shareholder agreements are important documents that need to be carefully developed. Customers will often ask for a “simple” shareholder pact (although none exists) and they will first be able to withhold the costs of a full and correct agreement. It may be useful to ask them whether they have taken into account the following issues, which are known to occupy the parties to the trial: in the absence of formal agreement on these issues, directors and shareholders can be maintained with very broad powers that may lead them to enter into agreements or commitments with which other shareholders disagree. A shareholder pact can be an effective way to define the terms of a company`s business. A well-developed shareholder pact can be clear to shareholders on issues such as the role each will play in the business, how profits and costs will be shared, disputes resolved and the estate rights of a deceased shareholder and remaining shareholders in the event of death or obstruction. Normally, the company will participate in a shareholders` pact with shareholders, as it usually contains provisions imposing obligations between each shareholder and the company, as well as between the shareholders themselves. For example, confidentiality and non-competition obligations, corporate share repurchase obligations in the event of a shareholder`s death or obstruction, etc. If the shares of an operating company are held by other holding companies, you can also add the adjudicating entities of the holding companies as parties to the shareholder contract. In general, restrictive agreements are much more applicable in a shareholders` pact than in an employment contract.

Common restrictions may constitute a shareholder who solicits or acts having to deal with clients of the company for a specified period of time. In some cases, it is justified to have a clause preventing an outgoing shareholder from competing with the company or working within a given geographical area with a competitor. If these clauses are properly developed, they can be implemented. Apart from minor implicit and legal obligations, there is no automatic protection for a company when a shareholder leaves a company to join a competitor and then tries to attract significant customers into the new business. This can be catastrophic for a company. I have certainly already experienced circumstances in which shareholders left the company, either to join a competitor or to start another business, and took a clientele almost entirely because they were not subject to restrictive agreements. Difficulties can arise when different shareholders have differing opinions on what to do for the benefit of the company. It is useful to have a dispute resolution mechanism in a shareholders` pact, even if it is only a buy-back clause for pellet guns (for example.B. Asks Group A to terminate the business relationship.

You say to Group B, “We will buy your shares for the XXX amount.” Alternatively, Group B can use “No.” We will buy your shares for the same amount.┬áThis counter-offer option is designed to ensure that those who try to buy the other party offer a fair price or even a premium. Such a mechanism will lead to the separation of the shareholders in dispute and the compensation of the outgoing shareholder. Where possible, the resolution mechanism should require the recalcitrant shareholder to do as little as possible to make it work. Corporate legal documents available online and a comprehensive precedent agreement are also available in the British Columbia Company Law Practice Manual (looseleaf, The Continuing Legal Education Society of BC). Shareholder agreements define how a shareholder can sell his shares and who should have the opportunity to buy the shares.