Shareholders Agreement Article

While a director, by virtue of his function as director, is entitled to all information relating to the activities of the company, he will subject this information to his fiduciary duties, including the obligation not to use this information to the detriment of the company. In addition, a shareholder who is not a director has, under company laws, very limited rights to obtain information which, in simple terms, is nothing more than a right to obtain the accounts that must be submitted to the general meeting for approval. Therefore, it is important, especially for minority shareholders, to include a right to management information. This can be considered as a right to obtain specific information (e.g.B. monthly/quarterly administrative accounts; Cash flow forecasts, annual budgets, etc.) and/or as a broader right to obtain information about management that such shareholder may reasonably solicit. In certain cases, such as where the minority shareholder is an investor, if the shareholder is not provided with relevant information, a shareholder may have the right to enter and copy the company`s premises, to interview employees and, on his behalf, to use consultants to investigate and report on the company`s activities. A company wholly owned by a person does not need to have such an agreement. However, as soon as there is more than one owner, such an agreement is indispensable. The spirit of such an agreement depends on the type of undertaking envisaged. For example, a retail business with three owners may take a totally different approach than a high-tech company that may have a lot of owners. If a company has hundreds of shareholders or becomes a “listed” company, the need for such an agreement disappears and the applicable law and securities rules then take over. What happens when a shareholder dies? There should be a fair way for surviving shareholders to acquire (optionally or compulsorily) shares in the estate of the deceased shareholder.

The company should have life insurance in order to be able to finance such buyouts. It is a good idea to also get specialized advice in tax accounting in this area. .