Shareholders are people (or companies) who have invested time or money in a company in exchange for shares (equity) in that company. Shares may have very different rights, for example some shares have voting rights, others do not have voting rights, but when it comes to voting shares, it is important to ensure that the relationship between shareholders is documented. Cash call clauses allow shareholders to continue to invest funds in the company and reward shareholders who invest in the company when it is needed. Shareholders should consider the possibility of a cash-call in the event of an investment in a company with regard to their finances and liquidity. A minority shareholder could block the sale of your business. The solution is to include tag and drag along rights in the articles or the shareholders` agreement. All the shares of the company will then be on sale if the majority wants to make a deal. The articles must represent the different classes of shares. The detailed conditions for the payment of dividends to the different classes of shares may be reserved for the shareholders` agreement.

This mechanism ensures that the shareholder making the first offer cannot offer to acquire the shares of the other shareholders at a price significantly lower than he would reasonably be willing to accept. However, in this case, the price or method of determining the price is not preset. A chevrotine clause is effective if the shareholders do not agree or cannot agree on the management of the company by allowing one to buy the others. It can also help avoid lengthy and costly dispute resolution. However, if a shareholder has limited cash or capital, he or she would be at a disadvantage compared to another shareholder with deeper pockets, who knows the limited resources of the other shareholder. The “wealthiest” shareholder can submit to the “poorer” shareholder an offer to buy his shares at a sharply reduced price, because he knows that the weaker shareholder cannot raise this amount to acquire the bidder`s shares in order to reverse the tender offer in accordance with the terms of a standard shotgun clause. As a shareholder, you only have the rights related to the class of shares you own. However, different shareholders holding the same class of shares all have the same rights.

The above examples only scratch the surface of the practical benefits that a shareholders` agreement can bring to a company under a corporate structure. If you have any questions or would like to discuss with someone the preparation of a shareholders` agreement, please contact a member of our sales and commercial team.. . . .