Shareholders' agreement

Single majority owner retains control
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Document overview

An agreement for a company that is controlled by a single shareholder-director, probably the founder, who has the largest individual shareholding. Other minority owners retain all their statutory rights, but otherwise have no special protection.
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  • Length:22 pages (6100 words)
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About this document

A shareholders agreement is an essential document to have in place. It takes over where company law stops - confirming the rights of the shareholders against one another and against other stakeholders in the business (particularly directors). It sets out how the shareholders intend the company should be operated.

This version is drawn for a situation where a single shareholder controls (and probably manages on a day to day basis) the business of the company. There is provision for the introduction of minority shareholders, but the largest shareholder remains firmly in control. Using a shareholder agreement is one of the most efficient ways of doing this.

Of course, one or more shareholders who control over 50% of the voting shares always control any company. This agreement enhances that position.

It also covers a situation where the largest shareholder may have transferred shares to several others, who collectively own more than he alone does. It minimises the opportunity for a takeover by several minority shareholders.

The document is suitable for companies of all sizes and in all industries.

It is drawn by a  solicitor with experience of problems that can occur in the management of such company.

Note: It is important that the constitution of the company permits and supports this agreement. 

Contents

No other shareholders’ agreements for sale on the Internet are so comprehensive in their cover of legal issues, and the drafting explanations and tips supplied. In many areas, we give you complete alternative paragraphs and explain in the notes when each will be the most suitable for you.

The provisions in this document are clear and can easily be edited or removed without affecting the remainder.

Examples of these are:

  • obligations of the company to the shareholders (the company is also a party to the agreement)
  • how shareholders will maintain their rights if they are not present at meetings
  • roles of directors and actions by the company or a director that require shareholders’ consent: controls and redistributes power between shareholders so that minority shareholders cannot club together to force certain decisions
  • new shareholder rights and restrictions: even if he is a trustee in bankruptcy
  • single director may delegate his or her powers
  • how to deal with new intellectual property
  • transfers of shares and rights of pre-emption or first refusal: when allowed, under what conditions and to whom
  • exit strategy
  • life insurance
  • dividend policy and procedure
  • publicity about the deal
  • confidentiality
  • use of a shareholders own assets in the business
  • different valuation methodologies for the shares on the departure of a shareholder

Other versions

We offer a number of agreements for shareholders. This one is based on our standard version, adapted to strengthen the control of a single member.

Sample shareholders' agreementFront cover

Recent reviews

Great Service
04 March 2019
Excellent!
Darryl Nunes
Review of the South African version
Does What It Says
13 August 2018
I have purchased a number of products from Net Lawman and to date I have always been very satisfied with the content of the product and with the service provided. The product does "exactly what it says on the tin"
Jon Dawson
Review of the United Kingdom version
Clarify payment options
14 May 2018
Excellent service and excellent service. Only one thing bothering is the payment gateway. When a document is advertised for R499 I don't want to pay R522.58
Hennie Nel
Review of the South African version
Read all 13 reviews

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