A Shareholders Agreement is a legal document binding the shareholders. It spells out the legal rights and obligations of the shareholders and their relationship with each other. A Shareholders Agreement is to complement the company’s constitution. It should add additional rules and regulations that are not covered by the constitution.
The Shareholders Agreement binds the individuals who sign the agreement whereas the constitution binds all shareholders of the company. A Shareholders Agreement is not a compulsory document but it is highly recommended that companies with more than one shareholder should have a Shareholders Agreement. It is recommended that the Shareholders Agreement be drafted before the company is incorporated.
The Shareholders Agreement is a private document and is not available to the public for general viewing, unlike the company constitution. The agreement will spell out matters like how shareholders enter and exit the company or the dividend policy of the company. This agreement will minimise disputes but if disputes arise, the Shareholders Agreement should spell out how disputes should be settled. This should help to reduce possible legal costs.
The Shareholders Agreement should also protect shareholder rights and should spell out the obligations of existing shareholders. The agreement should spell out how new shares will be offered to new shareholders or existing shareholders. The Shareholders Agreement should also protect against any oppression against minority shareholders.
If you are looking to do up a Shareholders Agreement, you may contact our company, Little Big Secretary Services Pte Ltd, to draft a Shareholder Agreement.
When in doubt, seek legal advice or consult an experienced ACRA Filing Agent.
Yours Sincerely,
The editorial team at Singapore Secretary Services
For more useful articles and videos, visit the Singapore Secretary Services resource page.
Related articles:
What is a shareholder agreement
[…] What are the reasons of having a Shareholders Agreement? […]