A shareholders' agreement is a contract between the owners of a company that defines their roles, rights and obligations as shareholders in the company. A shareholders' agreement specifies the appointment of managing shareholders, creates rules for appointing and terminating company officers and sets out requirements for board and shareholder meetings, shareholder duties, entitlements and rights to information and dividends.
Every shareholder wants to maximise the value of their investment, so why not supplement the company's articles by using this shareholder's agreement to prevent conflict and protect minority shareholders. This straightforward shareholders' agreement used between some or all of your company shareholders can be the best way to ensure stability and continuity.
Unlike the company's articles, the shareholders' agreement is confidential. It covers key issues such as company administration, the company's officers, new share issues, day-to-day management, decision-making and leaving shareholders. Shareholders should consider putting a shareholders' agreement in place as soon as possible after company formation or once the first shares have been issued.