Perhaps the most important part of such an agreement is a capitalization chart that shows who owns how many shares of different types belong. Shareholders` access to a company`s financial reports may also be controlled by this agreement. Entrepreneurs should also define the criteria by which a shareholder can be acquired and how to deal with differences of opinion. These clauses may have some frills; such as the lead clause, the right of pre-emption or simply a voluntary sale. The Tag Along option is as follows: if a shareholder intends to sell his shares to a third-party buyer, a Tag Along option allows other shareholders to „mark“ the sale, i.e. to sell their own shares to the same third-party buyer on the same terms. This ensures that if a shareholder (usually a majority shareholder) does good business, the remaining shareholders (usually minority shareholders) can withdraw under the same conditions. A „put“ is defined as the option to sell shares at a fixed price on a given date. In a shareholders` agreement, a shareholder may benefit from a put allowing him to require one or more of the other shareholders to buy part or all of his shares at a fixed price or at a price determined by a formula. The put may have some time before it can be exercised, or it may elapse if it is not exercised before a given date, or it may remain in effect virtually indefinitely. Another method that could be applied is the entry into force of a total ban on the transfer of shares to third parties.
Due to the restrictive nature of this method, it is considered unattractive to minority shareholders. It is a simple startup shareholders` agreement used in the first phase of a company`s development, that is, when the founders are the only shareholders and before the company receives funding. A mandatory offer of shares in the event of the death or liquidation of a shareholder ensures that the company`s shares remain in the hands of the remaining shareholders. If you would like to specify something else, please contact lawyers for assistance. In this shareholders` agreement, the fair value of the shares is determined by the statutory auditors of the company; or if the auditors refuse the instructions of an independent audit firm mandated by the company. Investor protection: Investors take a risk for their investment, as they may not recover the funds they have invested in the company and therefore often require shareholders to agree on certain provisions to protect their position. For example, they may require that the company`s performance objectives be met within a set period of time and, if those objectives are not met, the investor has the option of demanding certain measures or having the opportunity to take control of the business. These provisions are often found in a shareholders` agreement.
The Drag Alone ID option If a majority shareholder (or group of shareholders) is considering selling their shares to a third-party buyer, the towing provision gives them the right to compel the remaining shareholders (usually minority shareholders) to sell their shares to the same buyer on the same terms. . . .