These would be some of the much-loved mechanisms that shareholders seek and that are generally included in most shareholder agreements. These clauses are intended to protect existing shareholders from the involuntary dilution of their interest in the company. Any new issuance of shares (pre-emption right) or outgoing shareholding (pre-emption right) must first be offered to existing shareholders before they can be sold to third parties. These rights are generally proportional, although in some cases the parties may accept a “super right of preemption,” which means that some shareholders may have the right to invest more than proportionately. Without these important security measures, existing shareholders will eventually become a bigger cake at the end with a smaller coin. It is clear that this is not favourable to the founders, which is why we strongly recommend that these rights be written down. Do you remember 2005, when Mark Zuckerberg watered down Facebook co-founder Eduardo Saverin`s share on Facebook and fired him from the company? You never know when a friendly relationship can get upset. That is why it is always wise, for any practice with several shareholders, to sign a shareholder pact to protect your interests along the way. A shareholder contract is a binding contract between the shareholders of a company, in order to define their respective rights and rights and to organize the management of the company. Non-compete clauses are often included in shareholder contracts. By specifying when and how a shareholder may engage in competing activities during and after having been a shareholder of the company, it removes any ambiguity that may result from the absence of explicit restrictions. The reason for controlling the external efforts of shareholders is that the best knowledge of the intellectual property or the management system of the company, which are essential to maintain the company`s lead, must remain confidential, regardless of the arrival and the course of the shareholders.
In the shareholders` pact, the backs and don`ts, including the extent and duration of these restrictions, should be noisy and clear. It is imperative that the shareholders` pact includes a non-compete clause or that there is no point in crying over the milk spilled when a shareholder exploits the loophole and reveals the company`s business secrets. Note, however, that non-competition clauses must be appropriate to ensure their applicability. If they are excessively restrictive or overly broad, the Tribunal may decide that such a clause does not affect the shareholder. It is available to supplement the company`s statutes. Some binding provisions must be included in the agreement, but the rest is that the company`s shareholders decide on the basis of their personal and sectoral objectives. These clauses are introduced to protect the interests of minority shareholders. In general, minority shareholders cannot block decision-making, such as the appointment and dismissal of directors. In other words, a minority shareholder may hold 49% of the shares, but still does not have the power to influence the composition of the board of directors. In order to mitigate this rigidity, the shareholders` pact may provide a clause allowing a minority shareholder with a minimum percentage to appoint or remove a director.