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The Shareholders Agreement is a legally binding document that outlines the terms and conditions governing the relationship between the shareholders of a company. It is entered into by Party 1, Party 2, Party 3, Party 4, and Party 5, who have agreed to jointly invest in a company. The purpose of this agreement is to set out the terms governing their relationship as shareholders in the company.
The agreement begins with an interpretation section, which defines various terms used throughout the document. It includes definitions for accounting principles, directors, board, business, business day, business plan, chairman, chief executive, company, shareholders, shares, subsidiary, undertaking, and more.
The agreement then proceeds to outline the purpose of the company, which is to carry out the business described in clause 2. The business of the company is to be conducted in the best interests of the company in accordance with the general principles of the then current business plan approved by the parties.
The document also covers the characteristics of the company, including its name, registered office, authorized share capital, and initial directors, chairperson, chief executive, and secretary.
It further addresses capital and further finance, specifying that the company's issued share capital may be increased with the agreement of the parties. It also states that the parties do not have an obligation to contribute further funds or participate in any guarantee or similar undertaking for the company's benefit.
The agreement establishes the board and management structure of the company. The board is responsible for the overall direction, supervision, and management of the company, but certain reserved matters require the prior approval of the parties. The board is composed of directors appointed by each party, and a quorum is required for transacting business at any board meeting.
Financial matters, including accounting principles, auditors, and the company's financial year, are also addressed in the agreement. The company is required to adopt accounting principles approved by the board, and audited accounts, business plans, and budgets are to be provided to the parties.
Confidentiality obligations are outlined, stating that each party must keep confidential any information relating to the company's customers, business, assets, or affairs. Exceptions to the confidentiality obligation include disclosures to other group entities, professional advisers, tax authorities, and disclosures required by law or regulatory authorities.
The agreement also covers non-competition, regulatory matters, relationship with party's group, tax matters, transfer of shares, termination events, default, and further assurances by the parent company.
It includes provisions regarding notices, governing law, settlement of disputes, counterparts, and no rights for third parties.
The agreement is signed by the duly authorized representatives of the parties.
To use this Shareholders Agreement, follow these steps:
1. Review the entire document to understand its contents and implications.
2. Ensure that all parties involved in the agreement have a clear understanding of their roles and responsibilities as shareholders.
3. Make any necessary amendments or additions to the agreement to reflect the specific circumstances of the company and the shareholders.
4. Ensure that all parties sign the agreement and that it is properly executed.
5. Keep a copy of the signed agreement for future reference.
6. Regularly review the agreement to ensure that it remains up to date and relevant to the company's needs.
7. In the event of any disputes or disagreements, follow the dispute resolution process outlined in the agreement.
8. Seek legal advice if necessary to ensure compliance with applicable laws and regulations.
9. Remember that this agreement is legally binding, and failure to comply with its terms may result in legal consequences.
10. Consult with professionals, such as lawyers or accountants, for guidance on specific issues or concerns related to the agreement.