If your company has more than one Shareholder you should consider entering into a Shareholders’ Agreement. A Shareholders’ Agreement can provide clarity as to what will happen in certain circumstances and can help avoid drawn out and expensive disputes in the future.
Shareholders Agreements can cover a wide range of issues such as:
- Decision making
- Appointment of Directors
- Dividend policy
- Share dealing
- What happens on the death or insolvency of a shareholder
- Aims of the company
- Dispute resolution
Shareholders are free to negotiate terms as they see fit and by recording the agreed terms in a Shareholders’ Agreement the parties establish the ground rules by which they can assert their rights as shareholders. Ultimately, this can prevent disputes from disrupting the governance of the company.
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