Shareholder Agreement

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Shareholder Agreement

Shareholder’s Agreement (SHA) is one way in which such a security can be awarded to all stakeholders. Shareholder Agreement provides the exact ownership stake each partner will enjoy along with incumbent obligations. Even non-company contents like management rights, licensing intellectual property etc. are commonly included in the shareholders’ agreements.

Aspects of a Good Shareholder’s Agreement

Nomination of Directors etc.: The agreement may allocate the rights to certain stakeholders to be a director on board as well as decide the composition of the Board.

Roles and obligations of each shareholder.


Financing requirements, quorum requirements and veto rights.

Representation & Warranties from the Company.

Restrictions on transfer of shares (right of first refusal, right of first offer).

Forced transfer of shares (tag-along rights, drag-along rights) and curtailing of further issue of shares.

Defining Shareholding Threshold: There can be a minimum shareholding a party must have to enjoy the rights as under the Shareholding Agreement.

Determining and allocating special rights to certain shareholders

What is Shareholder agreement?

A Shareholder's Agreement is distinct from the company's constitution. Without a Shareholder's Agreement, the Company would be controlled solely and exclusively by the exercise of shareholding or directorship rights, through its constitution, and the Cyprus Companies Laws, which are generally insufficient, to protect the rights and interests of minority shareholders.

A Shareholder's Agreement contains the rights and obligations of shareholders of a company, and commonly covers matters, governing the management and structure, initial and continuing funding, as well as the administration and business activities of the Company.


A Shareholder's Agreement, is a significant and useful document, because it provides a mechanism, for setting out the principles, upon which the shareholders or partners, in a joint venture agree to run their business.


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