Shareholder Agreement or Stockholder Agreement is an agreement between shareholders that serves as the basis for any business. Establishing rights, obligations, controls, and rules from the beginning, the shareholder agreement includes clear information about the business objective and the directions for growth. Also, the shareholder agreement aims to ensure that shareholders have their rights protected and are treated fairly.
There are no legal rules that determine what to contain in a shareholder agreement. The shareholder agreements must be customized according to each business’s context and meet the parties’ needs. However, in general, for the security of the company, it is indicated that the shareholder’s agreement must contain:
- Information regarding the board and shareholders, as well as their rights and duties;
- Details about the company’s equity are that the division is structured;
- Acquisition, pledge, or mortgage clauses;
- Clauses on how to act in case of death of any of the board members;
- Information on how the actions are generated and treated is distributed;
- Commitment clauses that describe how disputes between shareholders can be handled;
- Information on property acquisitions;
- Management contracts and reliability
- Information about how decisions will be made and how they will be approved before the board and shareholders
- Clauses on what can trigger a dissolution of the business
The shareholders’ agreement must be well designed and can take a long time. A wrong shareholder agreement can cause irreversible damage to your business.
At Juzkiw Law Firm, we have experienced as a business lawyer with Shareholders Agreements or Stockholder Agreement. We can help you by creating a contract with all the legal requirements you need. Call us for more information – 416-221-2221