{"id":248854,"date":"2023-02-01T16:42:42","date_gmt":"2023-02-01T14:42:42","guid":{"rendered":"https:\/\/mypr.co.za\/?p=127859"},"modified":"2023-02-01T16:42:42","modified_gmt":"2023-02-01T14:42:42","slug":"benefits-of-a-shareholders-agreement","status":"publish","type":"post","link":"https:\/\/www.myza.co.za\/press\/benefits-of-a-shareholders-agreement\/","title":{"rendered":"Benefits of a Shareholders Agreement"},"content":{"rendered":"<aside class=\"scaip scaip-1 \">\n<aside id=\"republication_tracker_tool-2\" class=\"republication_tracker_tool clearfix\">\n<h5 class=\"adtitle\">Republish for Free<\/h5>\n<div class=\"license\">\n<p><button name=\"Republish This Story\" id=\"cc-btn\" class=\"republication-tracker-tool-button\">Republish This Story<\/button><\/p>\n<p><a class=\"license\" rel=\"noreferrer license noopener\" target=\"_blank\" href=\"http:\/\/creativecommons.org\/licenses\/by-nd\/4.0\/\"><img decoding=\"async\" alt=\"Creative Commons License\" class=\"lazyload\" src=\"http:\/\/www.myza.co.za\/press\/wp-content\/uploads\/2023\/02\/benefits-of-a-shareholders-agreement.png\"><\/a><\/p>\n<p><img decoding=\"async\" alt=\"Creative Commons License\" src=\"http:\/\/www.myza.co.za\/press\/wp-content\/uploads\/2023\/02\/benefits-of-a-shareholders-agreement.png\"><\/div>\n<div class=\"message\">\n<p>Republish our articles for free, online or in print, under a Creative Commons license.<\/p>\n<\/div>\n<\/aside>\n<\/aside>\n<p><span>Shareholders\u2019 agreements can regulate the following matters to provide for contractual<\/span><span><span>&nbsp;<\/span><\/span><span>certainty between <a href=\"https:\/\/bgdattorneys.co.za\/2022\/11\/17\/benefits-of-a-shareholders-agreement\/\">shareholders<\/a>:<\/span><\/p>\n<p><strong><span>1. Deadlocks in Decision-Making<\/span><\/strong><\/p>\n<p><span>If there are deadlocks in decision-making at the level of the board of a company or as<\/span><span><span>&nbsp;b<\/span><\/span><span>etween the shareholders, the way to resolve these deadlocks may be addressed in<\/span><br \/><span>the shareholder\u2019s agreement, for instance, by deferring certain decisions of the board&nbsp;<\/span><span>for decision-making at a meeting of shareholders or requiring the deadlock to be<\/span><br \/><span>directed to arbitration.<\/span><\/p>\n<p><strong><span>2. Pre-emptions and transfers of shares<\/span><\/strong><\/p>\n<p><span>Shareholder agreements may provide for how the shareholders sell, transfer, and<\/span><span><span>&nbsp;<\/span><\/span><span>dispose of their shares and claims against the company.<\/span><\/p>\n<p><span>Ordinarily, the shares will be offered to existing shareholders first.<\/span><span><span>&nbsp;<\/span><\/span><span>The <a href=\"https:\/\/bgdattorneys.co.za\/2022\/11\/17\/benefits-of-a-shareholders-agreement\/\">shareholder<\/a> disposing of their shares can also provide conditions for the sale of<\/span><span><span>&nbsp;<\/span><\/span><span>the shares, for instance, that they be released from any surety on behalf of the<\/span><span><span>&nbsp;<\/span><\/span><span>company, or if the release from the surety cannot be procured, that the acquiring<\/span><span><span>&nbsp;<\/span><\/span><span>shareholder agrees to indemnify the <a href=\"https:\/\/bgdattorneys.co.za\/2022\/11\/17\/benefits-of-a-shareholders-agreement\/\">shareholder<\/a> for any claims made as a result of the<\/span><span><span>&nbsp;<\/span><\/span><span>suretyship.<\/span><\/p>\n<p><strong><span>3. Forced or deemed sales<\/span><\/strong><\/p>\n<p><span>Shareholder agreements can provide for circumstances in which a shareholder is<\/span><span><span>&nbsp;<\/span><\/span><span>deemed to offer their shares to remaining shareholders in cases where remaining shareholders<\/span><span><span>&nbsp;<\/span><\/span><span>the shareholder would no longer wish for that <a href=\"https:\/\/bgdattorneys.co.za\/2022\/11\/17\/benefits-of-a-shareholders-agreement\/\">shareholder<\/a> to retain its interest in the<\/span><span><span>&nbsp;<\/span><\/span><span>the company, for instance, when:<\/span><\/p>\n<p><span>3.1. A shareholder who is a company is no longer controlled by certain shareholders;<\/span><br \/><span>3.2. If a shareholder cannot provide loan finance or refuses to sign a surety on behalf of the<\/span><span><span>&nbsp;<\/span><\/span><span>company when required by the <a href=\"https:\/\/bgdattorneys.co.za\/2022\/11\/17\/benefits-of-a-shareholders-agreement\/\">shareholder\u2019s<\/a> agreement to do so;<\/span><br \/><span>3.3. if a shareholder who is a natural person passes away;<\/span><br \/><span>3.4. if a shareholder who is a company is liquidated or a natural person who is a<\/span><span><span>&nbsp;<\/span><\/span><span>shareholder is sequestrated;<\/span><br \/><span>3.5. if a shareholder ceases to be an employee of the company.<\/span><\/p>\n<p><strong><span>4. Clauses of Come Along and Tag Along<\/span><\/strong><\/p>\n<p><span>4.1. The majority shareholder(s), typically holding more than 50% of the shares in<\/span><span><span>&nbsp;<\/span><\/span><span>If the company decides to compel remaining <a href=\"https:\/\/bgdattorneys.co.za\/2022\/11\/17\/benefits-of-a-shareholders-agreement\/\">shareholders<\/a> to sell their shares,<\/span><span><span>&nbsp;<\/span><\/span><span>the majority shareholder(s) obtain an offer from a third party to purchase their shares.<\/span><span><span>&nbsp;<\/span><\/span><span>The offer made by the third party will be identical with respect to the majority of&nbsp;<\/span><span>shareholders\u2019 shares as well as the shares of the remaining shareholders. This is<\/span><span><span>&nbsp;<\/span><\/span><span>known as a \u201ccome along\u201d clause. This enables the majority <a href=\"https:\/\/bgdattorneys.co.za\/2022\/11\/17\/benefits-of-a-shareholders-agreement\/\">shareholders<\/a> to sell 100% of<\/span><span><span>&nbsp;<\/span><\/span><span>the company if required.<\/span><br \/><span>4.2. A tag-along clause can allow the minority shareholders to elect to tag along on a<\/span><span><span>&nbsp;<\/span><\/span><span>sale of a majority shareholder\u2019s interest in the company. If, for instance, a<\/span><span>n offer is made to shareholders who own 60% of the company\u2019s issued shares.<\/span><span><span>&nbsp;<\/span><\/span><span>The remaining shareholders can demand in terms of compensation from a third party for their shares&nbsp;<\/span><span>a tag-along clause under which the third party also obtains its shares on the same terms.<\/span><\/p>\n<p><strong><span>5. Put Option<\/span><\/strong><\/p>\n<p><span>5.1 A shareholder may wish to reserve for itself the right to sell its shares in the company&nbsp;<\/span><span>to another <a href=\"https:\/\/bgdattorneys.co.za\/2022\/11\/17\/benefits-of-a-shareholders-agreement\/\">shareholder<\/a>. The Put and Call Option Clause will address the terms of this<\/span><span><span>&nbsp;<\/span><\/span><span>contractual right and how it is to be exercised.<\/span><\/p>\n<p><strong><span>6. Funding of the Company<\/span><\/strong><\/p>\n<p><span>The shareholder agreement can address how the parties wish to finance the<\/span><span><span>&nbsp;<\/span><\/span><span>company and whether they will be obliged to provide their own funding, sureties,<\/span><span><span>&nbsp;<\/span><\/span><span>approach financial institutions for finance, as well as how shareholder loans to the<\/span><span><span>&nbsp;<\/span><\/span><span>company will be treated, and when these are to be repaid.<\/span><\/p>\n<p><strong><span>7. Dividends<\/span><\/strong><\/p>\n<p><span>The shareholder agreement can provide for a<\/span><span>nd<\/span><span>&nbsp;<\/span><span>&nbsp;divide policy within the company&nbsp;<\/span><span>provided that the provisions of section 46 of the Companies Act 2008 have been met.<\/span><\/p>\n<p><span>The provisions of the shareholder agreement must not conflict with the<\/span><span><span>&nbsp;<\/span><\/span><span>Memorandum of Incorporation of a Company<\/span><span><span>&nbsp;<\/span><\/span><span>Provisions pertaining to shareholders\u2019 rights and responsibilities may also be<\/span><span><span>&nbsp;<\/span><\/span><span>addressed in the Memorandum of Incorporation and not in a separate shareholders\u2019 agreement.<\/span><span><span>&nbsp;<\/span><\/span><span>agreement; however, the Memorandum of Incorporation is lodged with CIPC and may<\/span><span><span>&nbsp;<\/span><\/span><span>be accessible to the public, whereas a <a href=\"https:\/\/bgdattorneys.co.za\/2022\/11\/17\/benefits-of-a-shareholders-agreement\/\">shareholder\u2019s agreement<\/a> is not lodged with<\/span><span><span>&nbsp;<\/span><\/span><span>CIPC.<\/span><br \/><span>Article by Lisa Boogaard (<\/span><span>15\/11\/2022)<\/span><\/p>\n<p><span>If you require assistance with Contract and Company Law Board matters, please contact us.<\/span><span><span>&nbsp;<\/span><\/span><span>Attorneys can serve clients remotely throughout South Africa and can accommodate on-site visits<\/span><span>&nbsp;at our practice in Fourways. We are easily accessible to surrounding areas in<\/span><span><span>&nbsp;<\/span><\/span><span>Johannesburg North, including Bryanston, Dainfern, Morningside, Midrand, Rivonia, and<\/span><span><span>&nbsp;<\/span><\/span><span>to name a few.<\/span><\/p>\n<p><span>We also offer fixed rates to start-ups in key contractual areas of law. For more information,<\/span><span><span>&nbsp;<\/span><\/span><span>Go to Fixed Rates at Boogaard Attorneys\u2019 (<a href=\"https:\/\/bgdattorneys.co.za\/2022\/11\/17\/benefits-of-a-shareholders-agreement\/\">bgdattorneys.co.za<\/a>)<\/span><\/p>\n<p><span>Our contract details are:<\/span><br \/><span>Block B, Infinity Business Park, Cnr. William Nicol Drive and Pieter Wenning Road, Fourways<\/span><\/p>\n<p><span>T 010 823 4553 C 072 116 4121<\/span><br \/><span>W www.bgdattorneys.co.za E lisa@bgdattorneys.co.za&nbsp;<\/span><\/p>\n<p><img loading=\"lazy\" decoding=\"async\" alt width=\"720\" height=\"540\" class=\"size-large aligncenter wp-image-127860 lazyload\" src=\"http:\/\/www.myza.co.za\/press\/wp-content\/uploads\/2023\/02\/benefits-of-a-shareholders-agreement-1.png\"><\/p>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"size-large aligncenter wp-image-127860\" src=\"http:\/\/www.myza.co.za\/press\/wp-content\/uploads\/2023\/02\/benefits-of-a-shareholders-agreement-1.png\" alt width=\"720\" height=\"540\"><\/p>\n<p><strong>Video:<\/strong> Benefits of a Shareholders Agreement<\/p>\n<p>[embedded content]<\/p>\n<p><strong><a href=\"https:\/\/mypr.co.za\/Benefits%20of%20a%20Shareholders%20Agreement\/2\/\">Boilerplate and Editor\u2019s Notes<\/a><\/strong>.<br \/><strong>More Info on <a target=\"_blank\" rel=\"nofollow noopener\">Benefits of a Shareholders Agreement<\/a> here:<\/strong><br \/><strong>Twitter<\/strong>: <a href=\"https:\/\/twitter.com\/BoogaardAttorn1\" target=\"_blank\" rel=\"nofollow noopener\">https:\/\/twitter.com\/BoogaardAttorn1<\/a><br \/><strong>Facebook<\/strong>:<\/p>\n<p><a href=\"http:\/\/mypr.co.za\/save-with-myprs-monthly-flat-fee\/\">CLICK HERE to submit your press release to MyPR.co.za<\/a>.<\/p>\n<p> <span class=\"post-views-icon dashicons dashicons-chart-bar\"><\/span> <span class=\"post-views-label\">Press Release Views since 1 July 2022:<\/span> <span class=\"post-views-count\">43<\/span> <\/p>\n<div class=\"entry-pagination pagination\">Pages: <span class=\"post-page-numbers current\"><span class=\"screen-reader-text\">Page <\/span>1<\/span> <a href=\"https:\/\/mypr.co.za\/benefits-of-a-shareholders-agreement\/2\/\" class=\"post-page-numbers\"><span class=\"screen-reader-text\">Page <\/span>2<\/a><\/div>\n<p><a href=\"https:\/\/mypr.co.za\">Source: MyPR.co.za<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Republish for Free Republish This Story Republish our articles for free, online or in print, under a Creative Commons license. Shareholders\u2019 agreements can regulate the following matters to provide for contractual&nbsp;certainty between shareholders: 1. Deadlocks in Decision-Making If there are deadlocks in decision-making at the level of the board of a company or as&nbsp;between the [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":248855,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_genesis_hide_title":false,"_genesis_hide_breadcrumbs":false,"_genesis_hide_singular_image":false,"_genesis_hide_footer_widgets":false,"_genesis_custom_body_class":"","_genesis_custom_post_class":"","_genesis_layout":"","ngg_post_thumbnail":0,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2}},"categories":[18,3332,9021,3336,1],"tags":[3257],"class_list":{"0":"post-248854","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-durban","8":"category-johannesburg-south-africa","9":"category-mypr","10":"category-pretoria-south-africa","11":"category-south-africa","12":"tag-mypr","13":"entry"},"jetpack_publicize_connections":[],"jetpack_featured_media_url":"https:\/\/www.myza.co.za\/press\/wp-content\/uploads\/2023\/02\/benefits-of-a-shareholders-agreement.png","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/www.myza.co.za\/press\/wp-json\/wp\/v2\/posts\/248854","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.myza.co.za\/press\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.myza.co.za\/press\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.myza.co.za\/press\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.myza.co.za\/press\/wp-json\/wp\/v2\/comments?post=248854"}],"version-history":[{"count":0,"href":"https:\/\/www.myza.co.za\/press\/wp-json\/wp\/v2\/posts\/248854\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.myza.co.za\/press\/wp-json\/wp\/v2\/media\/248855"}],"wp:attachment":[{"href":"https:\/\/www.myza.co.za\/press\/wp-json\/wp\/v2\/media?parent=248854"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.myza.co.za\/press\/wp-json\/wp\/v2\/categories?post=248854"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.myza.co.za\/press\/wp-json\/wp\/v2\/tags?post=248854"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}