Shareholders' Agreement

All you need to know about Shareholders' Agreement.

WHAT IS A SHAREHOLDERS' AGREEMENT?

A Shareholders' Agreement ('SHA') is an agreement between the shareholders of a company which governs the relationship of the shareholders and the framework of how the company will be run.

WHY DOES YOUR BUSINESS REQUIRE A SHA?

1. Clarity and certainty. Ensures that all shareholders are aware of their rights and responsibilities.
2. Shareholders' protection. Safeguards the rights of different interest groups e.g. 'drag-along' rights for majority shareholders and 'tag-along' rights for minority shareholders.
3. Avoid Deadlocks. Provides mechanisms to deal with deadlock situations e.g. where a unanimous decision cannot be reached.