What is a shareholder agreement?
Dec 3, 2022
A shareholder agreement is a legally binding contract between the shareholders of a corporation. It sets forth the rights and obligations of the shareholders with respect to the corporation, and can cover a wide range of topics, including:
- The ownership and transfer of shares: The shareholder agreement may specify how shares in the corporation can be transferred or sold, and may include provisions related to the sale of shares upon the death or disability of a shareholder.
- The management and operation of the corporation: The shareholder agreement may specify how the corporation will be managed and operated, including the roles and responsibilities of the shareholders and the decision-making process.
- Dividends and profits: The shareholder agreement may specify how dividends and profits will be distributed among the shareholders.
- Dispute resolution: The shareholder agreement may include provisions for resolving disputes among the shareholders, such as mediation or arbitration.
- Exit strategy: The shareholder agreement may specify what will happen if a shareholder wants to sell their shares or leave the corporation.
A shareholder agreement can be a useful tool for establishing clear rules and procedures for the management and operation of a corporation, and can help to avoid misunderstandings and disputes among the shareholders. If you are considering entering into a shareholder agreement, it is a good idea to consult with an attorney to ensure that the agreement is properly drafted and meets your needs.