http://inklingsandyarns.com/2010/12/new-toy-thursday/ The management of share transfers is often the main element of any shareholders` agreement. The Standard Direct Shareholder Agreement (SSSA) does not cover the following: preferential rights, the most fundamental and common form of percentage protection, give shareholders the right, but not the obligation, to purchase in the future new shares issued by a company on a pro rata basis in order to maintain their proportional ownership of shares. This right may apply to all classes of shares or only to certain classes of shares. Dilution protection clauses are typically linked to raising capital or increasing the shares issued. Dilution is simply a reduction in a holding which can be either a dilution of value (economic dilution) or a relative participation (dilution in percentage). Dilution protection provisions give an investor the right to maintain pro-rated ownership of an enterprise by allowing the investor to purchase a proportionate number of shares in a future issue of shares of the enterprise at specified or adjusted prices. If you are dealing with a tightly managed company with more than one shareholder, you should always draw the attention of shareholders to the need to consider a shareholders` agreement. If you are jointly required by all shareholders to design the agreement, you should recommend that each shareholder have the agreement audited by independent counsel prior to signing. If you are only mandated by one of the shareholders to design the shareholders` agreement, inform the other that you are not acting for them and that everyone should get independent legal advice. It is important to do this correctly, because one of the most important issues is reserved for the prohibition of any modification of the company`s share capital. This means that directors cannot issue new shares or convert existing shares into a new class (possibly with a higher dividend right) without all signatories agreeing to the amendment A shareholders` agreement may contain restrictions on, for example, the geographical area in which the company can operate, as well as restrictive agreements preventing a shareholder from competing with the company.
This type of provision is potentially very important and, if they are likely to be applicable, we advise you to use specific legal advice to create a shareholders` agreement in order to satisfy them. However, if you want to modify or modify the shareholders` agreement a posteriori, you need the company`s agreement, which is more complicated. Many entrepreneurs who create startups will want to design a shareholders` agreement for the first parties. This should clarify the original intentions of the parties; In the event of a dispute, as the company matures and changes, a written agreement can help resolve the issues by serving as a point of reference. Entrepreneurs can also include who can be a shareholder, which happens when a shareholder is no longer able to actively hold their shares (e.g. .