Shareholders` Agreement Drafting Checklist


    When starting a new business, it`s essential to ensure that all parties involved are on the same page. One way to do this is by drafting a shareholders` agreement. This legal document outlines the rights and responsibilities of each shareholder and helps to prevent disputes down the line. To ensure that your shareholders` agreement is comprehensive and effective, here`s a checklist of things to include:

    1. Shareholder Information: Start with identifying the names and contact information of each shareholder along with the percentage of shares they own.

    2. Purpose: The purpose of the shareholders` agreement should be clearly stated, along with the company`s goals and objectives.

    3. Roles and Responsibilities: The agreement should outline the roles and responsibilities of each shareholder, including any voting rights, decision-making powers, and obligations.

    4. Capitalization: The capitalization structure of the company should be clearly outlined. This includes the number of shares outstanding, the classes of shares, and the rights associated with each.

    5. Transfers and Buyout Provisions: Specify the circumstances under which a shareholder can sell or transfer their shares, and the terms and conditions surrounding a shareholder buyout.

    6. Dividend and Distribution Policies: Outline how and when dividends and distributions will be paid to the shareholders.

    7. Board of Directors: The agreement should outline the number of directors, their qualifications, and the process for appointing and removing them.

    8. Confidentiality and Non-Disclosure Provisions: Include confidentiality and non-disclosure clauses to protect the company`s confidential information.

    9. Dispute Resolution: Outline the process for resolving disputes among shareholders, including any arbitration or mediation clauses.

    10. Termination: Include provisions for ending the shareholders` agreement, including the consequences of termination.

    By including these ten essential elements in your shareholders` agreement, you can help avoid potential conflicts and misunderstandings among shareholders. Hiring an experienced attorney to draft your shareholders` agreement is always recommended to ensure that it complies with legal regulations and meets your business`s unique needs.

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