Shareholders’ Agreement
A Shareholders’ Agreement is a legally binding contract between a company’s shareholders that outlines their rights, responsibilities, and obligations. It supplements the company’s articles of incorporation and bylaws, addressing specific scenarios that may not be covered by general corporate law. Key provisions often include:
Voting rights and procedures
Rules for share transfers or sales
Dividend distribution policies
Tag-along and drag-along rights
Non-compete and confidentiality clauses
Dispute resolution mechanisms
Valuation methods for shares in the event of a sale, exit, or death
This agreement is especially common in private companies and startups where shareholders actively participate in governance and future strategic decisions.