Shareholders' Agreement – What Is It And Why Is It Needed?

One of the most important means to ensure sound and effective business operations, as well as to avoid unnecessary disputes in a private limited company, is the shareholders' agreement, which is also sometimes designated partnership agreement or consortium agreement. The shareholders' agreement is of particular importance in companies with a limited ownership base, as in such situations it is important to regulate the shareholders' actions in relation to each other and the company. In this article, we will describe the function of the shareholders' agreement and illustrate why shareholders, particularly in private limited companies with a limited ownership base, can derive major benefit from regulating their dealings through such an agreement.