Coordinate the agreement with mandatory law and the articles
A shareholders’ agreement can regulate cooperation but must be read alongside the company’s articles, mandatory law and the powers of its governing bodies. An agreement between shareholders does not by itself reallocate statutory powers. Identify which arrangements also need to be reflected in the articles or other corporate documents. [1] [2]
Design governance for disagreement, not only cooperation
Define decisions requiring additional approval, information flows and nomination arrangements. Address silence, absence and repeated blocking of decisions. Requiring unanimity for everything can create deadlock. A workable escalation mechanism should resolve difficulties without contradicting mandatory corporate rules. [1]
Make funding and exit provisions measurable
Specify whether additional funding is debt or equity, how it is approved and what happens if a participant does not contribute. “Market value” alone is an incomplete exit mechanism. Consider the valuation date, method, appointment of the valuer, treatment of debt and cash, and security for payment. Clear calculation rules reduce avoidable disputes.
Shareholder disputes may require different remedies
A contractual buy-out clause does not resolve every conflict. Depending on the facts, remedies may concern corporate resolutions, access to information, investigation of a legal entity’s activities or compulsory sale of membership interests. Each has distinct statutory conditions. Dissatisfaction with a partner does not itself create an automatic right to force a sale. [2] [1]
Test the agreement before signing
Work through three scenarios: one partner wants to sell, one stops funding and voting is tied. If the next steps are unclear, the agreement still needs work. Align confidentiality, conflicts management and dispute resolution. Where arbitration is chosen, assess the scope of the clause and whether the contemplated disputes may legally be arbitrated. [3]
Related competence area
Business law →Shareholder disputes: practical guides
Court investigation of a legal entity: when is it useful and where should you start?
The mandatory pre-action request, its content and timing, the role of experts and the difference between an investigation and a compulsory share sale.
Read →Compulsory sale of shares or membership interests: grounds, process and price
Buying another participant’s stake versus requiring purchase of your own: legal conditions, the two court stages, valuation and payment.
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