Shareholder Agreement And Articles Of Association

A common question I asked is whether a company must also establish custom and amended by-law, as well as a shareholders` pact, or whether it should simply retain the standard articles with which the company was created. Well-developed statutes will make it clear whether it is necessary, as a first step, to offer existing shareholders new shares in proportion to their stock of shares as a percentage (so that they can retain their shares, voting rights and dividend rights). Unlike the articles, it is neither a mandatory document nor a public document. There is no prescribed provision – it may contain in reason what the parties want to include from it. Most shareholder agreements determine the transactions it performs or plans to carry out and contain provisions that determine the circumstances under which the entity may change the nature, nature or location of its activities. In addition, most shareholder agreements provide that the company`s activities are controlled by its board of directors. This confirms Article 80 of the first part of Article A, which is one of the most important provisions of the statutes. Its effect is to give the board of directors of a company all the powers of the company that are not expressly reserved to shareholders at the general meeting by the statutes or by the law on companies. The result is a wide range of executive functions within the Board of Directors. It is important that an experienced lawyer advises you on your company`s status so that they are correct the first time. The reason is that a shareholder decision of more than 75% of shareholders is necessary to adopt by-law, so that companies are rarely more interested than necessary to modify articles.

Given that the primary purpose of a shareholders` agreement is to establish a set of internal management rules for the company and, where possible, to deal prospectively with the way potentially divided issues are dealt with, it is often found that shareholder agreements sometimes involve dispute resolution mechanisms.

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