We believe that it is quite possible to draw it yourself, provided that you use a good template as a basis (such as our own). The difficulty in drawing an agreement is not the legal wording but in considering the issues that the shareholders will face, and deciding what should happen in each scenario.
A shareholders’ agreement includes a date; often the number of shares issued; a capitalization table that outlines shareholders and their percentage ownership; any restrictions on transferring shares; pre-emptive rights for current shareholders to purchase shares to maintain ownership percentages (for example, in the …
Is a shareholders agreement legally binding? Once a shareholders agreement has been signed it should be legally binding, provided that it complies with the usual 4 aspects of a contract: offer, acceptance, consideration and an intention to create legal relations.
A shareholders’ agreement is an agreement entered into between all or some of the shareholders in a company. It regulates the relationship between the shareholders, the management of the company, ownership of the shares and the protection of the shareholders. They also govern the way in which the company is run.
Witnesses. A witness must have mental capacity and not be under the age of 18. The same person may witness more than one signature but must sign and complete the details below every signature witnessed. A party to the deed cannot witness the signature of another party to the deed.
Does everyone have to sign a shareholders’ agreement? A shareholder cannot be compelled to sign a shareholders’ agreement – i.e. each shareholder should enter into it voluntarily.
Most drastically, if there is much money involved, it can end in legal proceedings and a court will (in the absence of a shareholders’ agreement) order the company to be wound up. Everybody loses.
A shareholders’ agreement is created with the purpose of protecting both the business and its shareholders. It ensures the shareholders are treated fairly. It can also be beneficial to minority shareholders, who usually have limited control over the business operation.
Under a shareholders’ agreement, shareholder A agrees to transfer his entire shareholding to Shareholder B on his death. However, in his will, shareholder A subsequently bequeaths the shares to a third party in contravention to the shareholders’ agreement.
A Shareholders’ Agreement can provide a mechanism which, where one shareholder wishes to sell their shares, effectively gives the other shareholders or the company (as the case may be) a “right of first refusal” over those shares. This can be used to try and restrict who may or may not acquire shares in the company.