A shareholders’ agreement is a legal contract that outlines the relationship between shareholders in a company. It covers aspects such as the rights and responsibilities of shareholders, the allocation of shares, business operations, and decision-making processes.

The main purpose of a shareholders’ agreement is to ensure that all shareholders are treated equally and have a say in important decisions, particularly when new shareholders are added. Minority shareholders benefit the most from this agreement, as it provides them with protection from potential abuses by majority shareholders and gives them a voice in crucial decisions.

Protection for Minority Shareholders : A shareholders’ agreement provides protection and equal rights to minority shareholders, ensuring they are not marginalized in decision-making

Facilitates Share Purchase : A shareholders’ agreement allows minority shareholders to purchase shares from majority shareholders, providing equal opportunities to all shareholders

Control and Decision Making : Shareholders can set rules and guidelines to govern the company, including modifying or changing them, ensuring they have legal association with the company

Protects Shareholder Positions : Shareholder’s agreements ensure that the positions and roles of shareholders within a company are protected

Step 1: Determine the scope of the agreement: This includes identifying the shareholders involved, the company’s objectives, and the overall purpose of the agreement.

Step 2: Define the rights and obligations of shareholders: This includes outlining the rights of shareholders, such as voting rights, the right to dividends, and the right to transfer shares. It also involves defining the responsibilities and obligations of shareholders.

Step 3: Establish the decision-making process: The agreement should define how decisions will be made, including voting procedures, quorum requirements, and dispute resolution mechanisms.

Step 4: Address share transfer restrictions: The agreement should set out any restrictions on the transfer of shares, including pre-emptive rights and tag-along and drag-along provisions.

Step 5: Set out provisions for shareholder exits: The agreement should address the circumstances under which a shareholder can exit the company, including selling shares, voluntary resignation, and expulsion.

Step 6: Include confidentiality and non-compete clauses: The agreement should include provisions to protect confidential information and prohibit shareholders from engaging in activities that compete with the company.

Step 7: Consult with legal experts: It is highly recommended to seek the guidance of legal experts to ensure that the shareholder’s agreement complies with all applicable laws and regulations.

1. Articles of Association of the company

2. Memorandum of Association of the company

3. Company’s PAN card and registration certificate

4. List of shareholders with their contact information and shareholdings

5. Identification proof of all shareholders (such as Aadhar card, passport, or driver’s license)

6. Address proof of all shareholders (such as electricity bill, phone bill, or bank statement)

7. Latest audited financial statements of the company

8. Minutes of the board meeting or shareholder meeting where the decision to create a shareholder’s agreement was made

9. Details of any existing agreements between the shareholders

10. Any other relevant documents or information that the parties agree to include in the agreement