Shareholder Agreement

Share purchase agreements/ Shareholder agreements can be used in any instance in which one person or entity sells shares to another.

A share purchase agreement or shareholders agreement is a legal contract between a buyer and a seller of shares (sometimes stated in the contract as a "purchaser" and "vendor") in which the seller sells a stated number of shares at a stated price to the buyer of the shares. The agreement is proof that the sale and purchase of the shares and its terms were mutually agreed upon by the buyer and seller.

A shareholder agreement is essentially a contract between some or all of the shareholders in a company or the company itself.  The purpose of a shareholders’ agreement is to provide terms on how the company is to be managed and, as far as possible, to prospectively address issues that might otherwise become divisive in the future if not agreed in advance.  Certain important points flow from the basic fact that a shareholders’ agreement is a contract.

A shareholders' agreement should always be read and reviewed in conjunction with a company's articles of association. The articles of association binds the company and its members. The members of the company are only bound in their capacity as shareholders. The articles of association are registered with the Companies Registration Office when the company is incorporated. It is a  public document and open to inspection by the public. Any amendments to this must be notified to the the Companies Registration Office. Amendments are made by way of a special resolution, passed by 75% or more of the shareholders.The advantage of putting in place a shareholders’ agreement is that it is a private and confidential document. 

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