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Share Holder Agreement

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What is the definition of a Shareholders' Agreement?

A Shareholders' Agreement, also called a stockholders’ agreement, is a legal document executed between company's shareholders that defines rights and obligations of shareholders of the company and also describe how the company should be operated and covers issues governing the management and structure, initial funding, as well as the administration and business activities of the Company as well as shareholders' rights and ownership.

Why there is a need of a shareholders' agreement?

A well written shareholders' agreement clearly delineates and defines all terms of relationship between shareholders and it not only clarifies expectations and goals of company and shareholders but helps to avoid any dispute between the parties in the future. It is important and competent written document as it provides a mechanism for setting out the principles on basis of which the shareholders or partners, in a joint venture agree to run their business.

What are the services Lawyerinc offers for a Shareholders' Agreement?

Our services:

Our comprehensive range of end-to-end solutions includes following:

  • End to end services for a Shareholders' Agreement.
  • We have expertise in drafting a Shareholders' Agreement.
  • We will get in touch with you through expertise in this field.
  • Our Experts shall guide you through the procedure and supply you with a detailed checklist of the required documents.
  • We shall verify the documents you provide.
  • Free consultation for any enquiry that you may have about a Shareholders' Agreement.
  • You will get your Shareholders' Agreement drafting done without any hassles.

*Any fee, stamp duty and miscellaneous charges shall be payable extra.

Do contact us in case of any query related to a Shareholders' Agreement and much more. To avail any of the above-stated services, kindly establish contact by posting a query at our site.

What are vital components that must contain in a Shareholders' Agreement?

  • Structure of Company: A Shareholders' Agreement need to define structure of the company and the approach by which the value of the company will be divided among the investors.
  • Parties or shareholders to the agreement: A Shareholders' Agreement should contain the parties to the agreement such as details of all the shareholders along with their correspondence addresses and their stakes in company.
  • Status and rights of all shareholders: An agreement should add clause about status of all shareholders along with their stakes and shares in the company.
  • Roles and responsibilities of promoters and founders
  • Investment of the company
  • Auditors of the company
  • Issues related to involvement of all or few investors or shareholders
  • Clause related to status of the shares in any shareholder quits the organization
  • Incorporation of the names of the investors, board members, managers & other officers.
  • Steps to be taken in case of dispute arisen between shareholders.
  • confinement on new value
  • Legislation and arbitration clause: It is important to mention this clause so that parties can resolve the dispute through arbitration by appointment of sole arbitrator or whatever the case may be.
  • Verification: Both the parties need to sign the Share Purchase Agreement and verify the same in order to avoid any dispute in later stage. It is not obligatory to attest the same but some parties go for the same for better authentication.

What are various advantages of a Shareholders' Agreement?

  • Vide the agreement one can mention issues relates to ownership of shares of company in case of mental inability or liquidation or death of shareholder.
  • One can clearly set out guidelines related to installment, profit or any other issue.
  • Assurance can be given to investors who possess less than 50% shares or the minority holders of the company.
  • The issue related to disbursing of money of the organization can be decided beforehand.
  • Company can control the removal, contracting or employment of employees and the terms of the business.
  • Can describe recourse in case of any dispute.

Is a Shareholders' Agreement legally enforceable?

Once agreement is signed by verified by both the parties, it becomes binding and enforceable which enables them to discuss and start handing over business to other party. Both the parties need to ensure that terms and conditions mentioned in the agreement are complied and relied on completely for smooth functioning of business and to avoid any encumbrances in future.

Is oral agreement valid?

Although oral agreements are valid but agreements in written form are given more authenticity and are considered as legally valid. As well it avoids any kind of issues between the parties in future.

Frequently Asked Questions

  • 1. Are oral Shareholders' Agreement are valid?

    Although oral agreements are valid but agreements in written form are given more authenticity and are considered as legally valid. As well it avoids any kind of issues between the parties in future.

  • 2. Can I file a Complaint if party breached a Shareholders' Agreement?

    Yes, you can file a complaint in court or monetary penalty can be imposed as written in the agreement.

  • 3. Is it mandatory to get agreement attested?

    No, it is not mandatory to attest the agreement but for better authentication of the same it needs to get attested.

  • 4. Why to get a Business Sale Agreements drafted through lawyerinc?

    Lawyerinc is a complete blend of professionals from across the globe. In –house team of lawyers and attorneys, CA and CS. All professional work together in Lawyerinc, providing you end to end solution. It guarantees delivery in the shortest and most reasonable rate in India. It enjoys a global presence.

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