[Please note that this is a guide on the general position of minority shareholder rights under common law. This does not constitute legal advice. As each jurisdiction may be different, you may want to speak to your local lawyer.]

GUIDE TO MINORITY SHAREHOLDER RIGHTS:

This guide is to facilitate the understanding of minority shareholder rights under Common Law. It addresses the possible legal protections and remedies available to a minority shareholder, or which a minority might seek to include or exercise, in order to protect its position if things go wrong with a company ("Company"). It is not intended to provide a detailed analysis of the law, but gives general guidance on the most important matters to be taken into account.

A. Protections under Shareholders Agreement

Shareholders Agreement is the best form of legal protection for a minority shareholder. It allows a minority shareholder to incorporate express contractual provisions above and beyond those afforded by statute and corporate law. Members are often confused on which document to use in relation to Shareholders Agreements. The following table is a quick reference guide:

Documents	When to Use
Shareholders Agreement - Equal Shareholdings	A Shareholders' Agreement suitable for the set up of a relatively simple joint venture - a company with equal shareholding. This agreement is drafted for 2-5 parties and can be in Neutral, Strict or Loose Form.
Shareholders Agreement - Unequal Shareholdings	A Shareholders' Agreement to be entered into upon completion or establishment of the Joint Venture Company with standard clauses for minority protection. This agreement is drafted for 2-5 parties and can be in Neutral Form, or in favour of the Majority / Minority Shareholder.
Parental Guarantee to other parties in relation to Shareholders Agreement	In relation to a Joint Venture / Shareholders Agreement, a guarantee is given by a party's parent to the other shareholders for the party's obligations.

A well drafted Shareholders Agreement should allow the minority shareholder to: 

• participate in management through board representation;
• involve in any event in major decisions (including, where feasible, a right of veto);
• protect against its equity stake being improperly diluted;
• fair and proper distribution of profits;
• access to information regarding the Company's affairs;
• protection itself and the Company against the majority shareholder;
• exit the joint venture.

1. Board of Directors

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