If company that has a relatively few number of shareholders, then the potential for disagreement and deadlock is high. This is why many corporate law experts often advise every company with more than one shareholder to draft a shareholders’ agreement, even if there is no legal requirement to sign one.
Shareholders’ agreement is a document that helps each shareholder to manage their expectations and to provide for when any dispute may arise between parties. It is good for any company in general as it gives way for a smoother and profitable operations, and at the same time reduces the risk for potential conflict.
One of the benefits of the shareholders’ agreement is that it protects minority shareholders in case a majority of shareholders agrees on something that compromise the interest of the minorities. When there is an agreement in place, majority shareholders cannot force issues which are inconvenient for the minority or which are not in the minority shareholders’ interests.
To learn more about the fundamentals of shareholders’ agreement, check the infographic below from Amorys Solicitors.
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