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This document is a shareholders agreement that is entered into by four parties, referred to as party 1, party 2, party 3, and party 4. The agreement is important as it governs the relations between the shareholders in a jointly-owned company that will be formed. The document provides a detailed interpretation of the terms used and includes definitions for various key terms.
The agreement starts with the establishment of the company, which will be incorporated in a specific country as a company limited by shares. The parties will subscribe for shares in the company, and completion of the establishment will take place when certain events occur, including the payment for the shares and the issuance of share certificates.
The document also covers the capital structure of the company, further finance options, and the dividend policy. It specifies that the company shall distribute a certain percentage of its consolidated profit each year.
The board of directors is responsible for managing the business and affairs of the company. Each party has the right to appoint and maintain directors on the board, and certain matters require the prior approval of the parties.
The document includes provisions regarding the transfer of shares, confidentiality, restrictions on the parties, term and termination, and the supremacy of the agreement over the memorandum and articles of the company.
The agreement concludes with clauses on costs, no partnership or agency, entire agreement, mutual consultation and goodwill, assignment, no rights of third parties, dispute resolution, and notices and service.
Overall, this shareholders agreement is crucial for establishing the rights and obligations of the parties involved in the jointly-owned company and ensuring proper governance and decision-making processes.
1. Incorporation: As soon as possible, the parties should ensure the incorporation of the company in the specified country as a company limited by shares. This includes choosing a name for the company and preparing the memorandum and articles of association.
2. Completion: Completion of the establishment of the company should occur when certain events take place, such as the payment for shares and the issuance of share certificates. The parties should ensure that all necessary steps are taken to complete the establishment.
3. Capital and Finance: The parties should agree on the share capital structure of the company and consider any potential future increases in share capital. They should also discuss and decide on the approach for obtaining further finance if needed.
4. Board of Directors: The parties should appoint directors to the board of the company in accordance with their entitlement. They should ensure that the board is constituted by directors appointed by each party and that the quorum and voting rights are properly maintained.
5. Reserved Shareholder Matters: Certain important matters require the prior approval of the parties. They should consult and reach agreement on these matters, such as issuing shares, altering the memorandum and articles, or entering into significant contracts.
6. Transfer of Shares: If any party wishes to sell or dispose of shares, they must follow the transfer process outlined in the agreement. The other party has the right to purchase the shares at the proposed price, or the fair price can be determined by the auditors if necessary.
7. Confidentiality: Both parties should ensure the confidentiality of any information they acquire regarding the company or the other party. They should only use or disclose such information with consent or in the ordinary course of advancing the business.
8. Restrictions on the Parties: During the term of the agreement, the parties and their respective groups should not engage in any competing business without the consent of the other party. They should respect this restriction to avoid conflicts of interest.
9. Term and Termination: The agreement has a minimum term, but either party can terminate it by giving prior notice. Termination can also occur in certain circumstances, such as a breach of obligations or insolvency. The parties should be aware of their rights and obligations in case of termination.
10. Supremacy of the Agreement: The parties should ensure that this agreement is duly performed and that the provisions of the memorandum and articles are not infringed. In case of any conflict, this agreement prevails.
11. Costs: The costs of incorporating the company will be borne by the company itself. Each party is responsible for its own costs related to the preparation and execution of this agreement.
12. No Partnership or Agency: The parties should understand that this agreement does not create a partnership between them or make one party the agent of the other. They should not commit or bind each other in any manner.
13. Entire Agreement: This agreement, along with any other agreements entered into on completion, constitutes the entire agreement between the parties. They should not rely on any representations or warranties not expressly set out in this agreement.
14. Mutual Consultation and Goodwill: The parties should consult and act in good faith towards each other to promote the best interests of the company. They should communicate and cooperate on matters materially affecting the development of the business.
15. Assignment: The parties cannot assign this agreement or its rights and obligations without proper authorization. Any transfer of shares must comply with the provisions outlined in the agreement.
16. Conditions Precedent: If there are any conditions precedent to the establishment of the company, the parties should ensure that these conditions are fulfilled or waived before completion. They should use their best efforts to fulfill these conditions in a timely manner.
17. Amendment: Any variation of this agreement must be in writing and signed by or on behalf of the parties. The variation should not constitute a general waiver of any provisions and should not affect any rights, obligations, or liabilities that have already accrued.
18. No Rights of Third Parties: This agreement does not confer any rights on third parties to enforce its terms. Only the parties to this agreement have such rights.
19. Dispute Resolution: In case of any disputes, the parties should agree on a jurisdiction for legal proceedings. They should also ensure that notices and other communications are properly served and delivered to the designated addresses.
Note: This guidance provides a summary of the key steps and considerations. It is important to refer to the actual agreement for the complete and accurate details.