This version is designed for a situation in which a single shareholder controls (and probably daily) the business of the company. The introduction of minority shareholders is planned, but the largest shareholder remains under control. The use of a shareholder pact is one of the most effective ways to do so. Siblings Nancy and Benjamin Button each own 50% of Button Enterprises Limited (BEL); they are the managers of the company. There was no Constitution or shareholder pact. Over the years, they have successfully run their business. Her only problem was the bad relationship between Nancy and Benjamin`s new wife, Susan. The good news is that even if your business is already operational, it`s not too late to enter into a shareholder contract. As you can see in the Susan/Nancy situation, a shareholder pact can be invaluable for every company, regardless of size or industry.
It doesn`t need to be complex and can be adapted to your company`s specific situation. It is just like those who enter a `pre-nup` relationship property, it can pay to set rules in advance. It also covers a situation in which the largest shareholder may have transferred shares to several others who, together, own more than he alone. It minimizes the possibility of a takeover by several minority shareholders. The establishment of a shareholder contract and the discussions that will necessarily form part of the content decision will lead shareholders to address potentially important issues that would otherwise have been overlooked. It is important that the company`s statutes authorize and support this agreement. The following case study illustrates some of the benefits of a shareholder pact. We offer a number of agreements for shareholders. This one is based on our standard version, which has been adapted to strengthen the control of a single member. Susan and Nancy`s relationship quickly grew – Nancy often failed to convince Susan to sign a “special resolution” necessary for a company to complete a “big deal” (the 1993 Companies Act requires at least 75% of shareholders to approve major transactions).