An investment is the money spent on the acquisition or modernization of tangible assets such as buildings and machinery. Shareholder agreement on large investments protects shareholders from employees or executives of the group who, without shareholder approval, invest too much in certain companies. It protects shareholder investments from misjudgment by an executive or employee. The amount of the limit depends on the size and resources of the group, as well as the confidence of shareholders in management. A shareholder`s agreement is a document agreed and signed by all shareholders of a company. In Spain, a shareholders` pact is called a socios pact and refers to an agreement between all parties participating in a company, regardless of the structure of the company. In a small business where a person may hold more than 50% of the shares, a majority shareholder may be prevented from electing any director simply because of his or her majority ownership. Depending on your jurisdiction, you may have some options to determine the directors of the company. For example, shareholders could each appoint a director. This option works best if there are a smaller number of shareholders and you want each shareholder to have the same power. The preparation of a shareholder pact will not only increase shareholder control, but also avoid the uncertainty and risk of such a conflict.
It depends on the knowledge and trust of the shareholders. If you suspect that one or more shareholders might deny, have seen or signed, perhaps all signatures should be shown. In a recent case, the courts have looked at unsigned contracts. Mr. Grant and Mr. Bragg established a company and, at the time of the company`s creation, entered into a written shareholder pact that included value transfer and share transfer mechanisms. When Mr. Grant was ill for several months, the gentlemen agreed to fork out and a share purchase agreement whereby Mr. Bragg was to acquire Mr. Grant`s shares was produced by a law firm (“Dixon Ward”). Grant objected, but finally said by email on January 30, 2007 that he accepted it when nothing was signed.
We have also prepared a model shareholder pact with all these standard rules that you can buy and download. Our professionally developed shareholder pact model can be downloaded and adapted to your specific circumstances.