What is Shareholder Agreement ?
WHAT IS SHAREHOLDER AGREEMENT
Shareholder agreement is treated as supplement legal document for company constitution.
Is a agreement between shareholder with the Company , it does not means must include ALL shareholder , it can be prepared based on their control interest level, type of shareholding etc.
IS THE SHAREHOLDER AGREEMENT COMPULSORY ?
It is not mandatory for company to prepare shareholder agreement with Company Constitution is in place.
WHAT SHOULD INCLUDE INSIDE THE SHAREHOLDER AGREEMENT ?
There is no standard clause for shareholder agreement. Normally is depend on shareholder’s objection.
The following is the basic clause :
- shareholder’s basic right
- shareholder ‘s right during company on risk status : liqudation, be sued , restructuring
- how the procedure for decision to be made
- regulation in allotment of shares and shares transfer
- tag along and drag along provision
WHICH COMPANY SHOULD PREPARE SHAREHOLDER AGREEMENT ?
It is highly recommend that company with large number of shareholder , complex shareholding structure especially involved with another entity.
WHEN SHOULD SHAREHOLDER AGREEMENT PUT IN PLACE ?
There is no stipulate time frame when should company prepare and sign the agreement. But is highly recommend that before date of incorporation .
This is good timing to achieve common understanding between shareholder and company.
IS SHAREHOLDER AGREEMENT IS THE KEY SOLUTION IF DISPUTE OCCUR AMONG SHAREHOLDER ?
Number of shareholding you hold determine your control power in the Company, what if the following scenario happen ?
Scenario : Company A with 2 shareholder and each other hold 50% of the company share , how shareholder agreement help if there is dispute occur among them ?
Answer : Please ensure that ” Dispute resolution procedure “was included in the shareholder agreement
WHAT IS DISPUTE RESOLUTION ?
Dispute resolution is a term that refers to a number of processes that can be used to resolve a conflict, dispute or claim.
IS THE SHAREHOLDER AGREEMENT AVALIABLE FOR THE PUBLIC VIEWING ?
NO. Shareholder Agreement is means for private viewing .Only company constitution is avaliable for purchase as it was lodge in with ACRA during incorporation stage .