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Shareholders' agreement | ||
A shareholders' agreement (sometimes referred to in the In strict legal theory, the relationship between the shareholders (as between themselves) and between the shareholders and the company are regulated by the constitutional documents of the company. However, where there are a relatively small number of shareholders it is quite common in practice for the shareholder to supplement the constitutional documents with a shareholders' agreement, particularly where the company is in the nature of a joint venture. RationaleThere are a number of reasons why the shareholders must wish to supplement (or supersede) the constitutional documents of the company in this way: a company's constitutional documents are normally available for public inspection, whereas the terms of a shareholders' agreement, as a private law contract, are normally confidential between the parties. contractual arrangements are generally cheaper and less formal to form, administer, revise or terminate. the shareholders might wish to provide for disputes to be resolved by arbitration, or in the courts of a foreign country (meaning a country other than the country in which the company in incorporated). In some countries, corporate law does not permit such dispute resolution clauses to be included in the constitutional documents. greater flexibility; the shareholders may anticipate that the company's business requires regular changes to their arrangements, and it may be unweildy to repeatedly amend the corporate constitution. corporate law in the relevant company may not provide sufficient protection for minority shareholders, who may seek to better protect their position by using a shareholders' agreement to provide mechanisms for removing minority shareholders which preserve the company as a going concern. RisksThere are also certain risks which can be associated with putting a shareholders' agreement in place in some countries. In some countries, using a shareholders' agreement can constitute a partnership, which can have unintend tax consequences, or result in liability attaching to shareholders in the event of a bankruptcy. Where the shareholders' agreement is inconsistent with the constitutional documents, the efficacy of the parties' intended arrangement can be undermined. Countries with notarial formalities, where notarial fees are set by the value of the subject matter, parties can find that their agreement is subject to prohibitively high notarial costs, which, if they fail to pay, would result in the agreement being unenforceable. In certain circumstances, a shareholders' agreement can be put forward as evidence of a conspiracy and/or monopolistic practices. Copyright 2008 - France BtoB from Wikipédia
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• Employment discrimination
• Listing contract • Trading whilst insolvent • Shares and share capital of companies • Rights at work • Corporations law • Shareholders' agreement | |
