Automatic transfers are usually triggered when a shareholder dies; is convicted of a crime; is dissolved or liquidated (if the shareholder is a corporation); Insolvency claims resigned from his job in the company (where the shareholder is also an employee); against the SHA; other incidental restrictions that may harm the business; or, among other things, an obligation to the company. Shareholders can determine which acts or omissions trigger an automatic transfer and, as long as they are clearly defined in the SHA, they are binding. In the event of a voluntary transfer, the selling shareholder must ensure that the terms of the takeover offer are extended to other shareholders in proportion to their respective shares. The rights of the tag along exist to protect minority shareholders, so that a majority shareholder, when it sells its shares, grants other shareholders the right to join the transaction. An investment is the money spent on the acquisition or modernization of tangible assets such as buildings and machinery. Shareholder agreement on large investments protects shareholders from employees or executives of the group who, without shareholder approval, invest too much in certain companies. It protects shareholder investments from misjudgment by an executive or employee. The amount of the limit depends on the size and resources of the group, as well as the confidence of shareholders in management. Although shareholder agreements often cover similar areas (as explained here), there are many ways to deal with each topic. An experienced business lawyer will be able to guide you through the topics, draw your attention to the most important things, and then prepare a suitable document.
Drag-along rights allow a majority shareholder to force minority shareholders to sell a business. The shareholder who goes through the saturation must give minority shareholders the same price and conditions as any other seller. A SHA will generally indicate the number of original board members (and often their names and other details) and sometimes the rights of some shareholders to appoint a certain number of board members. Other shareholders, without the right to appoint directors, must vote in accordance with the company`s by-law. There are also some risks associated with implementing a shareholder agreement in some countries. When capital is raised, the new shareholder brings in, or when a current shareholder transfers shares to any number of funds (including family members) to third parties, those shareholders must be linked to the SHA. To do so, a SHA should clearly state that any new shareholder or acquirer must be a part of the SHA before receiving the shares. This can be achieved by requiring the purchaser or subsequent purchaser of shares/investor to sign a document in the form of a document by which they agree to be bound by all SHA conditions. Such a document is an “instrument of membership” or an “instrument of fidelity.” An valuation clause provides a method for determining the value of the company`s shares.