An introduction to shareholders’ agreement – Why are they important?

A shareholders’ agreement (“Agreement”) records the arrangements between the shareholders and directors of a company regarding the ownership, government and management of the company. Companies are not required to implement an Agreement by law. However, implementing an Agreement is recommended as it is designed to address areas regarding governance and control of business activities, whether external or internal, which a company constitution or the Companies Act 1993 may not specifically address. For example, the Companies Act 1993 may not provide specific guidance regarding the process for shareholders exiting a company. This is where an Agreement can be used by shareholders
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