When negotiating the shareholders` pact, it should be clear whether the company will have a board of directors, how many directors there will be and whether certain shares have the right to appoint or remove a board member. The procedures for appointment and revocation should be clearly defined in the shareholders` pact. With respect to the appointment of board members, you should also consider the restrictions that will be placed on board members. This CLE-Webinar will serve as an advisor for the development of shareholder agreements accompanying private equity transactions (EPs). The panel will review reflections and best practices to ensure that shareholder agreements are valid and binding on shareholders throughout the investment lifecycle, including an exit from research and development activities. The company`s capital structure determines the shares subject to the shareholder contract and the rights attached to each class of shares. For example, if the entity holds common and preferential shares, the shareholders` pact should clearly specify the rights attached to each class of shares. The shareholders` pact should also specify whether current shareholders are required to provide additional capital contributions to the company. External financing and associated conditions are generally determined by a company`s board of directors and must be linked to all guarantees in a SHA. In this case, the SHA may stipulate that such external financing must be obtained without guarantee or support from shareholders (unless everyone gives their prior consent).
A SHA also often grants a right of pre-emption to shareholders, so that if the company does not or only partially exercise its repurchase rights, non-ceding shareholders have the primary right to acquire those shares in proportion to their ownership of existing shares. A SHA should clearly state the detailed mechanism by which shareholders exercise their pre-reference rights and how the shares acquired in this way must be paid. In the case of a voluntary transfer, unsold shareholders may have the opportunity to acquire more than their proportionate share shares if one of the other unsold shareholders does not exercise its prior decision-making rights. However, in the case of an automatic transfer, shareholders who do not sell generally have to acquire all the “offered” shares. If, for whatever reason, unsold shareholders are not able to fully exercise their rights of first refusal, the company should repurchase the shares, otherwise those shares could enter unwanted hands. The SHA may indicate that, in this case, the shares are paid in installments over a specified period of time. Shareholders often have access to trade secrets, standard operating procedures, client and source lists, research and development, financial details and other sensitive or confidential information. A SHA may contain non-disclosure and non-competition clauses, compel shareholders to keep the secret and prevent them from working for competitors or other parties for whom the interests of the company could be harmed.
In addition, this language may also contain a non-invitation clause that prevents or prevents a shareholder from making transactions with a company or person who has been or is the company`s customer. All shareholders have rights to the financial and management reports of companies, which are usually presented annually. Large shareholders may be entitled to monthly or quarterly reports. Larger shareholders can also negotiate the right to access company documents, which can include company visits, interviews with company officials and the ability to copy records. While a SHA and the statutes were to be completed, a SHA may include a supremacy clause to ensure that the SHA annuls the statutes (in case of inconsistency, shareholders can then amend the articles accordingly).