Negotiating Shareholders Agreements

Another alternative is mandatory conciliation. A compromise clause in a shareholders` pact may provide that some, if not all, disputes adjudicating under the shareholders` pact may be referred to an external arbitrator. The main advantage of conciliation as a means of dispute resolution is not cost or speed, but confidentiality. Arbitration proceedings take place behind closed doors, when most court proceedings are tried publicly in the context of public order and can indeed be made public well before a court hearing. The right of pre-emption, the simplest and most common form of percentage dilution protection, gives shareholders the right, but not the obligation to acquire in the future in proportion to new shares of a company in order to maintain its proportionate ownership. This right may apply to all classes of shares or only to certain classes of shares. A SHA may contain terms in the statutes; However, a SHA is generally larger and offers more protection to shareholders. There is no standard form that adapts HSAs flexibly to the specific needs of shareholders. Articles and SHAs are often complementary.

In many legal systems, the statutes can only be changed by the adoption of a special decision (75% or more of the shareholders present and voting at a general meeting). However, a SHA often requires unanimous approval of its revision, but may also require overwhelming approval (a number of votes that represent well over half of the voting shares, but less than 100%) – Through specific discussions about what should be part of a shareholder pact, it focuses the minds of parties who may not have previously considered addressing certain scenarios. An advantage for small private companies is that shareholder agreements set out the conditions under which shareholders can withdraw from the transaction and transfer their shares. Since any share transfer can be considered an essential event for related close companies, it is important to have flexible conditions to reconcile the interests of the company with those of each shareholder. Certain conditions of transmission are common: in this SHA clause, the provisions often exceed protection in the legal or standard statutes and provide for provisions of the majority for the approval of certain acts. A super-majority requires a large majority of shareholders (usually 67% or more) to approve significant changes. Standard statutes often require only a simple majority (50%) for many subjects.

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