Lawyer for shareholders’ agreement

The shareholders’ agreement sets out agreements between the shareholders, drawn up by a solicitor, just like a contract. The agreement is extremely valuable for a company or private limited company in order to prevent conflicts in the future. In the shareholders’ agreement, a solicitor sets out, among other things, the structure and objectives of a company, as well as the business plan and the manner in which multiple shareholders work together.

Protecting shareholders

If a company has only one shareholder, it is not necessary to draw up a shareholders’ agreement. However, when a new shareholder joins the company, interests change and clear agreements are needed. Given the importance of agreements, the company’s articles of association have already been created to protect shareholders. Entrepreneurs can fall back on these in the absence of a shareholders’ agreement.

Why a shareholders’ agreement?

A shareholders’ agreement is an agreement concluded between several shareholders. The agreement is used to record important agreements. Putting these on paper can prevent conflicts and ambiguities. In addition, this agreement offers partners the opportunity to take important decisions that deviate from the articles of association.

The drafting of articles of association is a legal requirement when establishing a legal entity. The articles of association contain all the internal rules and agreements that apply within a company, such as the appointment and dismissal of directors, shareholder requirements, the manner in which an organisation operates and rules for the transfer of shareholders.

The shareholders’ agreement can be drawn up in addition to the articles of association and provides scope for making additional agreements for shareholders. Moreover, amending these agreements is a lot easier. Whereas amendments to the articles of association or the transfer of shares can only be done through a solicitor, this agreement can be amended between the parties themselves.

Difference between articles of association and shareholders’ agreements

The articles of association already contain a number of important agreements for shareholders. What many shareholders see as a disadvantage is that these articles of association are public. This is different with the shareholders’ agreement. It is not public. The articles of association can be requested from the Chamber of Commerce. Agreements that contravene these articles of association may be made in the agreement, making it a unique contract for each partnership. Shareholders can circumvent the established rules and laws.

How does a shareholders’ agreement prevent conflicts between shareholders?

The articles of association regulate the formal structure of your company, but often say little about the mutual relationships between shareholders. A shareholders’ agreement fills that gap. In it, you lay down agreements about voting rights, profit distribution, decision-making and, for example, the sale of shares. The agreement also often contains provisions for conflicts or withdrawal, so that you do not have to go to court every time there is a difference of opinion. A well-drafted shareholders’ agreement prevents ambiguity and provides peace of mind and continuity within the company.

A shareholders’ agreement prevents conflicts by establishing clear agreements about cooperation within the company. By determining in advance who is authorised to make decisions and when, what happens in the event of disagreement, and how parties can withdraw, you can prevent ambiguity and legal escalation. The agreement acts as a safety net for situations that are not or insufficiently regulated by the articles of association. A well-thought-out shareholders’ agreement helps to keep relationships stable and professional.

What do you lay down in a shareholders’ agreement?

When drawing up a shareholders’ agreement or amending the agreement between the shareholders, certain matters must not be omitted. But what is a shareholders’ agreement? On the blog linked above, we explain the essential components of a shareholders’ agreement. These are all matters that must be laid down in the shareholders’ agreement. Given the importance of the agreement and its provisions for both shareholders and the company itself, it is advisable to have a solicitor draw up or review the shareholders’ agreement.

Breach of contract in the event of non-compliance with agreements

If the agreements in a shareholders’ agreement are not complied with, is this a breach of contract or does it constitute liability on the part of a shareholder in the event of bankruptcy? In the event of a breach of contract, the agreement can be dissolved and compensation claimed. It goes without saying that less drastic measures, such as demanding compliance with the agreement, are also possible. Is there a breach of contract? Then it is wise to engage a solicitor.

A solicitor specialising in corporate law can provide targeted advice and support to directors and shareholders in imposing an appropriate sanction. It is therefore important to draw up the agreement in good time and to engage an experienced solicitor for this purpose. A solicitor can also assess an existing shareholders’ agreement.

Conflict situations and exit arrangements

It is very important to have a solicitor arrange the above matters in the shareholders’ agreement. It is not easy to part ways with another shareholder in a conflict situation. That is why exit arrangements are often included in these types of agreements. An exit arrangement sets out how the (forced) departure of a shareholder is to be handled. This includes agreements on matters such as the obligation to offer shares, the valuation of shares and penalty discounts.

What are the advantages of an exit arrangement in a shareholders’ agreement?

An exit arrangement determines how shareholders can leave the company or be bought out. This prevents uncertainty and legal disputes when a partnership ends. Examples include agreements on valuation methods, who has the first right of purchase, or when sale to third parties is permitted. Such an arrangement provides clarity in advance, limits the impact on the company and makes it easier for all parties to work together with confidence.

Lawyer and drawing up a shareholders’ agreement

Drawing up a shareholders’ agreement is a customised process. In order to properly set out agreements between shareholders on paper, all parties must be on the same page. It is therefore important that all shareholders discuss together how they see the relationship.

In practice, it often happens that a shareholders’ agreement is insufficiently clear because agreements have not been properly or fully recorded. This encourages discussion – and possibly even a shareholders’ dispute. When recording the agreements, always have a solicitor check the shareholders’ agreement or, even better, engage the help of a legal specialist in drawing up the agreement.

Non-competition clause for departing shareholders

An important part of the shareholders’ agreement is the non-competition clause. This clause is intended to prevent a shareholder – both during the period that he is affiliated with the company and in the event of a departing shareholder – from engaging in competitive activities in relation to the company. Drawing up a non-competition clause and the obligations thereof is not mandatory, but it is a wise choice. A corporate law solicitor can advise you on the content of the non-competition clause, as well as other important matters, such as dividend payments, exit arrangements and the method of valuing shares.

Assessing a shareholders’ agreement

A shareholders’ agreement must comply with Dutch legislation and regulations. A solicitor specialising in corporate law or contract law can assess and review the shareholders’ agreement. It is also advisable to engage a specialist solicitor when amending a shareholders’ agreement.

The advantages of working with Fruytier solicitors

A corporate law solicitor knows exactly what needs to be included in the shareholders’ agreement, which agreements can and cannot be laid down, and what the consequences of certain arrangements are. Would you like to have a shareholders’ agreement assessed or drawn up? The corporate law solicitors at Fruytier Lawyers in Business specialise in corporate law and have years of experience in drawing up agreements and general terms and conditions. For more information, please feel free to contact us or enquire about engaging a solicitor to draft or review a shareholders’ agreement and discover how we can help you.