When reviewing a shareholders agreement, it is important to look out for the following key provisions:
- Ownership: The agreement should clearly define the ownership structure, including the number of shares each shareholder owns and any restrictions on the transfer of shares.
- Voting rights: The agreement should specify the voting rights of each shareholder and outline the procedures for making important corporate decisions.
- Dividends: The agreement should define the distribution of dividends, including the amount and frequency of payments.
- Management: The agreement should outline the responsibilities of the management team, including the appointment and removal of directors, and the allocation of responsibilities among the shareholders.
- Dispute resolution: The agreement should provide a mechanism for resolving disputes between shareholders, such as arbitration or mediation.
- Exit rights: The agreement should specify the conditions under which a shareholder can exit the company, including the right to sell their shares and the procedures for valuing the shares.
- Restrictions: The agreement should include any restrictions on the activities of the company and its shareholders, such as non-compete clauses or confidentiality agreements.
- Transfer of shares: The agreement should define the procedures for transferring shares, including any restrictions on transfer and the terms of any pre-emptive rights.
Ensuring that these provisions are clearly defined and understood by all parties can help to minimize the risk of disputes and ensure the smooth operation of the company. It is recommended to consult a legal professional to review and advise on the terms of a shareholders agreement.