A shareholders’ agreement is a confidential legal document between the shareholders of a company. As such the agreement it is not accessible to third parties unless disclosed.
The agreement ensures that a mutual understanding exists between the shareholders’ by explicitly providing the agreed terms for the management and control of the company. Moreover, shareholders agreements are drafted in order to regulate and specify the obligations shareholders have to each other.
It is normal to find provisions in a shareholders’ agreement which specify and regulate, amongst other matters, the following:
- the decision making procedures (voting powers at board level or shareholder level);
- the rights and obligations of shareholders;
- detailing who can constitute the Board of Directors ;
- right to a shareholder to nominate a Director;
- provisions for the death of a of shareholders;
- restrictions regarding issue, transfer and sale of shares in the company;
- providing for pre-emption rights;
- provisions regarding the appointment and removal of directors;
- provisions regarding protection for minority shareholders;
- dividend payment procedures;
- provide competition restrictions;
- dispute resolution and deadlock provisions;
- dispute resolution procedures’;
- protection and promotion of the interests of the company.
A shareholders’ agreement must be consistent with both the articles of association of the company and with the law.
A breach of the shareholders agreement entitles the innocent party to seek legal redress and claim, amongst other remedies and measures, damages, court injunctions and court orders.
We can assist you with the drafting of a shareholders’ agreement and provide advice and litigation representation in the event of a dispute arising. If you require further information relating to the above or with regards to company or commercial law advice in Cyprus contact us using [email protected]
The above should be used as a source of general information only. It is not intended to give a definitive statement of the law and is subject to the disclaimer.