WHAT IS A SHAREHOLDERS AGREEMENT?

A Shareholders Agreement contain details about the relationship between the Shareholders and the Management of the Company.

A Shareholder’s Agreement should contain the following clauses:-

1. Rights, Obligations, Privileges and Powers including but not limited to voting rights of the Shareholders together with the Procedure at the Shareholders Meetings;

2. the Proceedings at the Board and the Rights, Obligations, Privileges and Powers of the Director(s);

3. the Structure and the Management of the Company;

4. procedures and regulations relating to Transfer of Shares; and

5. Deadlock Events.

The purpose of a Shareholders’ Agreement is to reduce and/or eliminate future disputes and disagreements between the Management of the Company and the Shareholders of the Company or between the Majority Shareholders and the Minority Shareholders.

In the event of any disputes, the Shareholders Agreement should state, mention, and/or specify the most appropriate ways in which disputes may be addressed.

A Shareholders Agreement should promote good corporate governance by striking a balance between the “Rights of the Minority” and the “Majority Rule”.

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