A shareholders' agreement is a contract between the shareholders of a company that governs the relationship between the shareholders and specifies who controls the company, how the company will be owned and managed, how shareholders' rights may be protected and how shareholders can exit the company.
The basic shareholders' agreement typically includes the following terms:
Definition of terms. The agreement should define key terms such as "shareholder", "voting rights", "dividends", and "exit".
Voting rights. The agreement should specify how voting rights are allocated to the shareholders. This is important for determining who has control of the company.
Management of the company. The agreement should specify how the company will be managed. This includes matters such as the appointment and removal of directors, the quorum for shareholder meetings, and the voting rights of directors.
Transfer of shares. The agreement should specify the conditions under which shares can be transferred. This is important for protecting minority shareholders from being diluted.
Dividends. The agreement should specify how dividends will be paid. This includes matters such as the amount of dividends, the frequency of payments, and the circumstances under which dividends can be withheld.
Exit. The agreement should specify how shareholders can exit the company. This includes matters such as the right of first refusal, the right of tag-along, and the right of drag-along.
The specific terms of a shareholders' agreement will vary depending on the specific circumstances of the company and the shareholders. However, the basic shareholders' agreement outlined above provides a good starting point for protecting the interests of all shareholders.
Here are some additional things to consider when drafting a shareholders' agreement:
Get professional advice. A lawyer can help you draft a shareholders' agreement that is tailored to your specific needs.
Be clear and concise. The agreement should be clear and concise so that it is easy to understand.
Be flexible. The agreement should be flexible enough to allow for changes in the company's circumstances.
Get it in writing. A shareholders' agreement should be in writing and signed by all of the shareholders.
By taking these steps, you can ensure that your shareholders' agreement protects your interests and helps you achieve your business goals.
Model Shareholders' Agreement
Here is a model shareholders' agreement for Singapore:
This Shareholders' Agreement (the "Agreement") is made and entered into as of the [DATE] by and between [NAME OF SHAREHOLDER 1], [NAME OF SHAREHOLDER 2], and [NAME OF SHAREHOLDER 3] (collectively, the "Shareholders").
In consideration of the mutual covenants and agreements contained herein, the parties agree as follows:
(a) "Company" means [NAME OF COMPANY], a company incorporated under the laws of Singapore.
(b) "Shareholder" means each of the parties to this Agreement.
(c) "Ordinary Shares" means the [NUMBER] ordinary shares of the Company, paid-up value [AMOUNT].
2. Voting Rights
(a) Each Shareholder shall have [NUMBER] votes with respect to each Ordinary Share held by such Shareholder.
(b) The Shareholders agree to vote their Ordinary Shares in accordance with the majority vote of the Shareholders present at a meeting of Shareholders.
3. Management of the Company
(a) The management of the Company shall be vested in a Board of Directors (the "Board").
(b) The Board shall consist of [NUMBER] directors, who shall be elected by the Shareholders at the annual meeting of Shareholders.
(c) Each Shareholder shall be entitled to cast [NUMBER] votes for each director to be elected.
(d) The Shareholders agree to vote their Ordinary Shares in accordance with the majority vote of the Shareholders present at a meeting of Shareholders for the election of directors.
4. Transfer of Shares
(a) No Shareholder shall transfer any of its Ordinary Shares without the prior written consent of the other Shareholders.
(b) The Shareholders agree that they will not sell, transfer, or otherwise dispose of any of their Ordinary Shares to any person or entity that is a competitor of the Company.
(a) The Board shall have the authority to declare and pay dividends on the Ordinary Shares.
(b) The amount of any dividend shall be determined by the Board in its sole discretion.
(c) Dividends shall be paid on a per-share basis.
(a) If a Shareholder wishes to sell or otherwise transfer its Ordinary Shares, such Shareholder shall first offer to sell such shares to the other Shareholders at a fair market price.
(b) If the other Shareholders do not wish to purchase such shares, the Shareholder may sell such shares to a third party.
(c) In the event that a Shareholder sells its Ordinary Shares to a third party, the other Shareholders shall have the right to purchase a number of shares equal to the number of shares sold to the third party.
(a) This Agreement shall be governed by and construed in accordance with the laws of the Republic of Singapore.
(b) This Agreement may be amended or modified only by a writing signed by all of the Shareholders.
(c) This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, successors, and assigns.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above.
[SIGNATURE OF SHAREHOLDER 1]
[SIGNATURE OF SHAREHOLDER 2]
[SIGNATURE OF SHAREHOLDER 3]
This model shareholders' agreement includes some of the key terms that are typically found in a shareholders' agreement in Singapore. However, it is important to note that this is just a model agreement, and it may not be appropriate for all situations. It is important to get professional advice when drafting a shareholders' agreement.
Here are some additional things to consider when drafting a shareholders' agreement in Singapore:
The Singapore Companies Act imposes certain restrictions on the transfer of shares in a private company. These restrictions should be considered when drafting a shareholders' agreement.
The Singapore Companies Act also provides for a statutory right of pre-emption in relation to the transfer of shares in a private company. This right may be waived or modified in a shareholders' agreement.
The Singapore Companies Act also provides for a statutory right of a minority shareholder to exit a company in certain circumstances. This right may be waived or modified in a shareholders' agreement.
It is important to get professional advice when drafting a shareholders' agreement in Singapore to ensure that the agreement is valid and enforceable.
How Bestar can Help
Bestar is a company that provides corporate secretarial services, including drafting and registering shareholders' agreements. They have a team of experienced professionals who can help you draft a shareholders' agreement that is tailored to your specific needs and compliant with the laws of Singapore.
Bestar can help you with the following:
Drafting a shareholders' agreement: Bestar's professionals can help you draft a shareholders' agreement that covers all of the important issues, such as voting rights, management of the company, transfer of shares, dividends, and exit.
Providing ongoing advice: Bestar can provide you with ongoing advice on your shareholders' agreement, as your company grows and changes.
If you are considering forming a company in Singapore, or if you already have a company in Singapore and you need help with a shareholders' agreement, Bestar can be a valuable resource.
Here are some of the benefits of using Bestar to help you with your shareholders' agreement:
We have a team of experienced consultants who can help you draft a shareholders' agreement that is tailored to your specific needs and compliant with the laws of Singapore.
We can provide you with ongoing advice on your shareholders' agreement, as your company grows and changes.
We are a reputable and reliable company with a good track record of providing corporate secretarial services.