A shareholders’ agreement reflects the dynamics of the shareholders’ relationship.

A shareholders’ agreement typically sets out clauses relating to appointment of directors, quorum required for a shareholders’ or board meeting to be valid, procedures for directors or shareholders to decide on matters relating to the company, whether there are any reserved matters that require unanimous decision at shareholders’ or board meeting, how deadlock is resolved, transfer of shares and the rights and responsibilities of each shareholders.

Some business owners rely on Google for sample clauses or precedents for shareholders’ agreements.

Google is not your best friend in such instance.

Each precedent should be tailored to meet the shareholders’ specific requirements and circumstances. The shareholders’ responsibilities should be set out clearly, which may differ on a case-by-case basis, depending on the nature of business undertaken by the company.

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This post was first posted on Linkedin on 8 February 2021.