Shareholders Agreement Hong Kong Template

A shareholder contract, also known as a founding contract, is a contract between the founders of a company to regulate their rights as shareholders of the company. A mandatory share offer after the death or liquidation of a shareholder ensures that the company`s shares remain in the hands of other shareholders. If you would like to specify something else, talk to the lawyers. In this shareholders` pact, the fair value of the shares is determined by the company`s factor controllers; or if auditors reject the instruction by an independent audit firm appointed by the company. A company`s statutes are a document that defines the obligations and responsibilities of directors, the type of transactions to be carried out and the means by which shareholders exercise control of the board of directors. This is a mandatory document that must be submitted to the business register. In addition, I strongly recommend that you add your expectations to your business partners as an annex to the shareholders` pact (or as a separate business creation arrangement). This is especially important if your trading partners are committed to doing more than just making their share of the financing capital available. Be specific and define measurable results. If one of your business partners claims to be in charge of business development, you define exactly what that means (for example. B the number of paying customers purchased and up to when, how many events are organized to represent the company and attract sales managers, etc.). Don`t leave too much room for interpretation. Make sure a full shareholder pact is reached.

This will protect your business partners in the event of a dispute or if someone wishes to withdraw. Sometimes disagreements between shareholders lead to deadlocks where the company cannot make a decision. It can seriously harm his day-to-day business. To avoid this, shareholder agreements may offer exit strategies that may force one or more shareholders to purchase others. In this case, it is recommended to refer to independent expertise or to choose a pre-established formula to determine the value of the shares of the outgoing shareholder. PandaTip: This model of shareholder agreements defines the conditions for shareholder interaction and what happens when one or more of them want to leave the company or something happens that forces the exit of a shareholder or the closure of the company. The “drag-alone” option id When a majority shareholder (or group of shareholders) intends to sell its shares to a third-party buyer, the Drag-along plan gives it the right to compel the remaining (usually minority) shareholders to sell their shares on the same terms to the same purchaser. This will ensure that the third-party buyer will be able to acquire the entire business, which could be decisive in the negotiations on the sale.

The drag-along mechanism is a drastic measure and minority shareholders must understand their effects before approving it. Deadlock is a situation in which two shareholders or two groups of shareholders are unable to agree on certain key issues.