In addition, shareholder agreements often provide that joint ventures – 50/50 shareholders or majority and minority shareholders – and to manage cross-border relationships often, shareholders invest in a new company when the business plan is not yet fully formulated. If this is the case, a shareholders` pact will require directors to receive « sign-off » shareholders on the finalized business plan or any changes. The agreement should provide that shareholders are entitled to regular (usually quarterly) reports and an annual report. The date and time of this annual meeting may also be indicated. A shareholder contract often defines things that the company should not do without the prior approval of all signatories. Through an agreed list of reserve issues, shareholders have the option of vetoing certain transactions if they believe they will harm their investment in the company. Most reserved positions are elements that would otherwise be the responsibility of a board of directors (i.e. no shareholders) without reference to shareholders. A balance must therefore be struck, as the list of reserved cases, if it is too long, could hinder the day-to-day management of the business. Once a shareholder contract has been concluded – preferably at the same time of the company`s creation – it is hoped that each signatory will meet all the conditions. However, sometimes, either intentionally or negligently, one or more provisions are violated. In this case, the party who has suffered damage may be entitled to damages, but very often the act in question. B of the award of new shares is perfectly valid and remains binding on the company and cannot be challenged, unless the company has acted outside the statutes or legal provisions.
The agreement allows transfers to other parties, but they must first recognize the terms of the agreement. Once the declaration is signed, the new party will be considered a shareholder within the meaning of the agreement. Regulate how shareholder-to-shareholder activities should be regulated and try to ensure that shareholders are treated fairly and that their rights are protected. For example, by booking certain decisions, such as the possibility for the company to issue other shares that can only be taken with the unanimous agreement of all shareholders. It is not necessary for a shareholders` pact to contain certain information or to always deal with a particular issue. Indeed, a shareholder pact can cover a whole range of issues or just one. This can be used to try to limit who may or may not acquire shares in the company. It allows shareholders to make decisions about what external parties can become future shareholders.