Shareholders’ Agreements

January 2010


The Shareholders' Agreements have been re-drafted to reinforce the recent changes in Company Law. In addition, each Agreement contains a set of specific guidance notes to assist you in tailoring that particular Shareholders' Agreement to your needs.

The categories of shareholders' agreements remain as follows:
- Basic Shareholder Agreement - New Share Issue
- Basic Shareholder Agreement - No Share Issue

- Standard Shareholder Agreement - New Share Issue
- Standard Shareholder Agreement - No Share Issue

- Shareholder Agreement - long - New Share Issue - Majority Shareholder Bias
- Shareholder Agreement - long - No Share Issue - Majority Shareholder Bias

- Shareholder Agreement - long - New Share Issue - Minority Shareholder Bias
- Shareholder Agreement - long - No Share Issue - Minority Shareholder Bias

For each of the agreements where new shares are to be issued, the wording has been clarified so that Shareholders A to D are the existing shareholders and the Investors are those who will subscribe for new shares. The existing shareholders may also be Investors, and this can be recorded in the schedule. Each of these agreements is designed for a newly incorporated company or a company in its early years which plans to receive outside investment. The agreements where no shares are issued are designed for existing companies who have not previously had a shareholders' agreement in place but now wish to have one.

Substantial revisions have been made to the Transfer provisions in each of the Standard and Long agreements. All agreements contain an optional clause whereby an individual shareholder's shares will automatically be offered to the other shareholders if he or she dies. In the long agreements, Permitted Transfers of shares to close family members, Family Trusts and within company groups are not subject to the pre-emption provisions. The Options of the Majority/Minority Shareholder(s) in the agreements with a majority/minority shareholder bias have been improved. Numerous other minor revisions and improvements have been made throughout.

The additional clauses (Deadlock Clause, Deadlock Clause - Multiple Choice, Minority Shareholder Director Right Clause, Shareholder Employee Dismissal and Resignation Clause, Drag Along Clause, and Tag Along Clause) have been revised to improve clarity.

The contents of this Newsletter are for reference purposes only and do not constitute legal advice. Independent legal advice should be sought in relation to any specific legal matter.

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