What is a Shareholder’s Agreement?
A shareholder’s agreement is just a contract determining the liaison between the shareowners of a business or a company. A shareholder’s agreement India comprises of the rights and duties, relocation of shares, operations of the business, and how crucial verdicts and decisions are made.
What are the benefits of a shareholder’s Agreement?
It Clears Authority: A shareholder’s agreement India clears the authority and standing of a shareowner and the license you stock as the issuer of such shares by characterizing the power and risks for all. Additionally, it mediates as a governor of the interaction between small and big shareholders.
Ease In Making Amendments: A shareholder’s agreement facilitates the perfect conditions for making amendments to the company constitution. It is suitable for small-scale and medium businesses that do not wish to officially change the entire constitution whenever minute changes are required to be made.
What should a shareholder’s agreement include?(Checklist)
Rights of a shareholder
- Right to vote
- Right to appoint directors and the company auditor
- Right to ask for a general meeting
- Right to inspect the books & registers of the company
- Right to the financial statements of the company
Regulations related to the transfer and sale of shares of the company
Certain rules need to be incorporated in a shareholders agreement India to protect the shareholders’ interest with regards to the transfer and sale of company shares. Such rules would ensure that such a sale or transfer happens only after receiving the mutual consent of the parties associated.
Financial requirements of the company
Shareholders can proceed to obtain the most feasible source of funding, whenever they think it to be beneficial for the company. The shareholder’s agreement draft includes the procedure to obtain such finances.
Requirements of quorum
The shareholder’s agreement will mention the requirements related to a quorum (the minimum number of members required to constitute a valid meeting)
Methods for Valuation of shares of the company
Considering the frequent fluctuations in the market, proper valuation of company shares is extremely important for the fortunes of the company. The valuation methods and approaches are laid down precisely in the shareholder’s agreement India.
Guidelines to run the company
The shareholder’s agreement would contain the guidelines, policies, and procedures to ensure the smooth running of the company on a day-to-day basis.
Shareholders only have limited liability with the company and are not liable directly for the activities of the company. The liabilities of the shareholders are defined clearly in the agreement.
Protection of minority shareholders
The rights of the minority shareholders, as per provisions of the Companies Act, 2013, are laid down in the shareholder’s agreement. The agreement will ensure the protection of the minority shareholders in the event of mismanagement, oppression, or Piggy Backing (sale of shares by majority shareholders).
Advantages of a Shareholder’s Agreement
What is the process of preparing a shareholder’s agreement at StartupGenie?
3 Business Days: Upon contact, your request to file for a Shareholders’ Agreement will be received and our representative will be in touch with you to take your request forward. If we need more information from your end, we will call you as and when required. After we receive all your details, our in-house lawyers and legal experts, will create the shareholder’s agreement draft and send it across for your view within 2- 4 business days.
2 Business Days: Your original price includes two rounds of iterations. Therefore, if you need any changes done to the shareholder’s agreement format, our lawyers will do the needful and send it across to you for your approval once again.
Access to Experts: We connect you to verified expert lawyers, who will work on your documents until you’re completely happy. You can track the progress on our platform at all times.
9.1 Customer Score: Clients are delighted with our service! They have consistently rated us highly because of our focus on simplifying legal requirements and providing regular updates.
300+ Strong Team: Our team of experienced business advisors are just a phone call away, should you have any queries about the process. Our team will ensure that your interaction with professionals is smooth and seamless.