Questions every Shareholder should answer

It is essential that shareholders of each company sign a shareholders agreement – preferably at the beginning of the relationship.  Read our article Mother of all disputes to find out why.  In preparation for concluding a shareholders agreement, each shareholder should read and consider the issues raised in the following questions.  The shareholders should then collectively debate the issues and find common ground.  The task of then drafting and concluding the shareholders agreement is much easier.

In our Shareholders Agreement template, we provide various examples of how these issues can be dealt with.  These questions should therefore really be considered in conjunction with that template.

1 Shareholding

Precisely who the shareholders will be and what will their shareholding (expressed as a percentage) in the company will be?

2 Directors

1. You must decide what the maximum number of directors will be.
2. Whether or not each shareholder will be entitled to appoint a director.
3. Who the initial directors of the company will be.
4. Whether or not there will be a chairman of the board and managing director;
5. Whether or not the chairman will have a casting vote in addition to his deliberate vote.
6. Whether or not the directors will be remunerated, and if so on what basis.
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   Tags: issues, questions, shareholder, Shareholders, shareholders agreement, template