Closely Held Corporation Shareholder Agreement Sample

A closely held corporation refers to a type of company that has a limited number of shareholders, with most of the shares owned by a small group of individuals. In this type of corporation, it is important to have a shareholder agreement that outlines the rights, responsibilities and obligations of all shareholders. This agreement is a legally binding contract that helps to prevent disputes and disagreements among the shareholders, and ensures that the corporation runs smoothly.

A shareholder agreement is a document that outlines the rights and responsibilities of shareholders in a corporation, including the process for buying or selling shares, decision-making processes, and other details. It is important to have this agreement in place, as it helps to protect the investments of all shareholders, and ensures that the corporation is able to operate effectively.

Here is a sample of a closely held corporation shareholder agreement:

1. Purpose of the Agreement

This agreement sets out the contractual relationship between the shareholders of the corporation, and governs their conduct and relationship.

2. Shareholder Undertakings

The shareholders agree to undertake to:

a. Not dispose of any shares in the corporation except in accordance with this agreement

b. Ensure that the corporation is operated in accordance with the provisions of this agreement

c. Attend and vote at all meetings of the corporation

d. Act in good faith and in the best interests of the corporation

e. Not compete with the corporation

3. Decision-Making Process

a. Decisions of the corporation shall be made in accordance with the provisions of this agreement.

b. Unless otherwise provided in this agreement, the affirmative vote of the majority of shareholders, representing at least 51% of the shares held by shareholders present or represented by proxy at the meeting, shall be required to authorize any action.

c. All decisions shall be made by the shareholders in a meeting.

d. Each shareholder shall be entitled to one vote per share held.

4. Transfer of Shares

a. A shareholder shall not transfer any shares in the corporation except in accordance with this agreement.

b. If a shareholder desires to sell or transfer any shares, he or she shall first offer those shares to the other shareholders.

c. If the other shareholders decline to purchase the shares, the shareholder may sell or transfer those shares to a third party, subject to the approval of the other shareholders.

5. Amendments

This agreement may be amended from time to time by the written agreement of the shareholders, provided that such amendment is approved by the affirmative vote of at least 51% of the shares held by shareholders present or represented by proxy at a meeting of shareholders.

In conclusion, a shareholder agreement is a vital document for any closely held corporation. It helps to ensure that all shareholders understand their rights and obligations, and that the corporation is able to operate effectively. The above sample outlines the key provisions that should be included in a shareholder agreement, but it is important to note that each agreement should be tailored to the specific needs of the corporation and its shareholders.

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