A shareholder agreement is an agreement amongst the shareholders of a company. a shareholders’ agreement would normally regulate the ownership and voting rights of the shares and management of the company.
Shareholder Agreement Basics
When a company is formed, its shareholders may decide on a set of ground rules over and above the basic legislation that will govern their behavior. For example, how do you handle a shareholder who wants to quit the company, How are disagreements handled? Who gets to sit on the Board? What authority is given to whom for various decision-making activities? all these questions need to be answered in your shareholder agreement
A company which is wholly owned by one person need not have such an agreement. However, as soon as there is more than one owner, an shareholder agreement is essential. The spirit of such an agreement will depend on what type of company is contemplated. When a company has hundreds of shareholders or becomes a “public” company, the need for such an agreement disappears and the applicable Act and securities regulations then take over.
Shareholder Agreement Template
Template tools: there are some common software such as Word or Excel that may include free template you can choose. search the free template and make modifications to add your personal touch
Template Format: Shareholders’ agreements vary enormously between different countries and different commercial fields. but your template need to include some key areas: how to regulate the ownership and voting rights of shares, how to control and manage the company and provisions for future dispute resolutions etc
Template tips: There are some tips when designing your shareholder form
**you need to first separate shareholder issues from management issues
* make sure everyone’s objectives and visions are compatible
* get some tax advice. It is very important that some tax planning be done early to avoid a headache later when you’ve made millions. e.g. you want to make sure that you are not compensated by being given shares, you want to make sure you own shares early so that you can use the small business lifetime capital gains exemption, maybe a family trust or holding company should own your shares.