What is a shareholder agreement?
Simply put, a shareholder agreement is a contract that is
entered into by the shareholders of a corporation, which
establishes the rights and obligations of each shareholder to the
corporation, and to each other. A shareholder agreement can, and
often does, deal with many different issues. However, there are 3
noteworthy reasons why corporations with more than one shareholder
should have a shareholder agreement in place:
1. Protection of Shareholders
A shareholder agreement can provide protection for both majority
and minority shareholders. It will often specify the voting and
quorum thresholds at both director and shareholder meetings, and
can also establish that certain business decisions will require
either a supermajority vote or unanimous consent of the
shareholders. The provisions and mechanisms of a shareholder
agreements can empower minority shareholders to
join the majority shareholders in certain share sale
