Shareholders’ Agreements

Shareholders agreements can be classified temporally and numerically: it can be formed before incorporation or after incorporation, and the parties to the agreement can be some or all of shareholders.

Shareholders agreements typically are prepared to ensure that certain parties have some control over the corporation, to restrict the transfer of stock and to determine what happens when a shareholder leaves the corporation. Through the use of vesting restrictions, shareholders agreements also aim to keep key personnel as part of the business.

Shareholders agreements can be more complicated that Operating Agreements and Partnership Agreements because of its interplay with the corporate charter (the Certificate of Incorporation) and the corporation’s bylaws. A court could very well hold a provision in a shareholders’ agreement that is in direct contravention of the charter to be invalid, and the only way to realize the intent of the agreement would then be to amend the charter itself.

A pre-incorporation shareholders agreement is sometimes beneficial because it contemplates the relationship between the charter, the bylaws and the shareholders agreement. The agreement serves as a blueprint for the preparation of the charter and bylaws, so that the appropriate provisions in those documents can be brought in line with the intent of the shareholders agreement.

Apart from shareholders agreements which are signed by all shareholders and deposited at the corporation, corporate law also recognizes agreements between two or more shareholders. For example, two founders can agree to vote for each other as directors of the corporation.

Our law firm help you or your business prepare a solid shareholders agreement. Contact us to set up an appointment today.

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