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Shareholders regularly approach us with a request to draft or review a shareholders' agreement. A shareholders' agreement contains specific arrangements regarding the collaboration. There is no standard document available for drafting a shareholders' agreement. The specific wishes and needs of the shareholders form the basis of the arrangements in the shareholders' agreement. Below, I discuss four important topics that can be included in a shareholders' agreement.
One of the most important topics is the exercise of voting rights and the manner of decision-making. Often, the shareholders’ agreement contains a list of decisions that require a majority of, for example, two-thirds or three-fourths of the votes. An example of this is a decision to amend the articles of association. Also, a list of decisions can be included for which the board needs the prior approval of (a majority of) the shareholders, such as the decision to initiate legal proceedings or to lease a business premises. The shareholders’ agreement can even stipulate that shareholders are obliged to cast their vote in the general meeting in a certain way.
The question of how, when, and under what conditions dividends are distributed is important for every shareholder. By making clear arrangements, every shareholder knows what to expect regarding the distribution of profits. This prevents unnecessary misunderstandings and disappointments.
Conflicts are inevitable in any business relationship. It is therefore important to include in the shareholders’ agreement how these conflicts are resolved, for example through arbitration or mediation. Avoiding (lengthy) legal procedures benefits every shareholder and the company.
Finally, the shareholders’ agreement can provide for arrangements in case a shareholder wants to leave the company and sell their shares. The articles of association usually contain a provision that the shares must first be offered to the existing shareholders. In addition, the shareholders’ agreement can include arrangements about the price of the shares. In an earlier blog, my colleague Tim de Vries extensively discussed this topic.
A good shareholders’ agreement reflects the collaboration and relationship between the shareholders and prevents unnecessary discussions.
Do you need advice on (drafting) a shareholders’ agreement? Please contact Jarno de Graaf, Corporate Law Attorney, or one of the specialists from the Ondernemingsrecht team.
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