Shareholder Agreement Risks
Shareholders with smaller holdings can secure their participation by listing issues that need their consent or by imposing on certain shareholders the right to appoint a director, which also allows shareholders with smaller holdings to ensure the protection of their investment. Unlike a statute, a shareholders` agreement does not need to be published and can remain confidential between the company`s shareholders. However, the acquisition of shares involves certain risks: it is possible that a shareholder will not receive the percentage of the profit that he or she expects. Financial crises and political upheavals can influence a company`s activities. In strict legal theory, the relationship between shareholders and those between shareholders and the company is governed by the company`s constitutional documents. [Citation required] However, if there is a relatively small number of shareholders, as in a startup, it is customary for shareholders to complete the constitutional document. There are several reasons why shareholders want to complete (or replace) the company`s constitutional documents: if you want to improve the structure or management of your business or if you need help creating a shareholders` agreement, BlueRock Partners can help. Do not hesitate to contact us to meet your individual business needs. If shareholders want these types of rights with respect to decisions, but no shareholders` agreement has been entered into or has not been specifically designed to address these types of concerns, the company could make decisions that do not align with the shareholders` intentions. It is often difficult to envision a scenario in which shareholders break down or have difficulty making decisions. This is especially at the beginning, where there is a lot of energy and positive thinking between shareholders. In cases where a shareholder (or related group) has a majority on the board of directors, it is important to consider whether there are matters that should not be decided by a majority of representatives of the board of directors. Instead, a class of essential decisions (which must be defined in the agreement) may require the unanimous agreement of the director and/or shareholders, or by a super-majority or other approval threshold.
Appendix A discusses some examples of the types of issues that could be dealt with in such a voting authorization system. If you want a fundamental overview of shareholder agreements, read our FAQs or our contribution on what is covered by a shareholders` agreement.. . . .