Regulation and Protection
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Shareholders Agreement: Regulation & Protection (more)

A shareholders agreement regulates the business and protects the shareholders of the company. These agreements provide far better protection to shareholders than under common law Click here to see a list of the rights of shareholders without a shareholders agreement or Model Articles. For instance, a shareholders agreement can:

regulate voting rights

  • regulate the payment of dividends

  • impose a 'first refusal' to buy shares or interests if one of the shareholders wishes to sell

  • regulate the appointment and removal of directors

  • impose a requirement for shareholders to transfer their shares in certain circumstances, for instance if they commit a fraud, act of gross negligence or breach of contract or resign as an employee

  • regulate the situations in which shareholders can be expelled from the business

  • include non-compete clauses

  • set out a process to resolve disputes, and...

  • impose reserved matters on the directors which is a list of matters which require prior consent from the shareholders, for instance not incurring debt or agreeing to transfer shares