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What is a Shareholder’s Agreement?
What is a Shareholder’s Agreement?
Sriyanka Nakarmi avatar
Written by Sriyanka Nakarmi
Updated over a week ago

A Shareholder’s Agreement is a contract signed by the shareholders in a company. It describes how the company should be run, and the various rights and obligations of each of the shareholders. It can be between some or all the shareholders in the company. It is an essential document that protects minority shareholders in the company.

In a nutshell, a Shareholder’s Agreement covers the following (not exhaustive):

  1. How a company should be run

  2. Describe how important decisions will be made

  3. A shareholder’s rights and obligations

  4. The rules and regulations around the issuance and transfer of shares in the company (e.g. right of first refusal, valuation method, etc)

  5. Protection for any minority shareholders in the company by way of a reserved matters list

  6. Confidentiality and non-compete clauses for founders and management

  7. What happens when a shareholder passes away

  8. Deadlock and dispute resolution mechanisms

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