A shareholder agreement is a written agreement among all of the shareholders of a corporation relating to the affairs and management of the corporation. The agreement permits the shareholders to manage the corporation in a partnership-like manner. A shareholder agreement is among all of the shareholders of the close corporation or, if the corporation only has one shareholder, between the shareholder and the corporation.
A shareholder agreement may contain provisions relating to any phase of the affairs of a corporation, including, but not limited to, the management of its business, the division of its profits, annual meetings, or the distribution of its assets on liquidation. As between the parties to the agreement, it may alter or waive all provisions of the General Corporation Law, except those that are specifically exempt from alteration or waiver.
A shareholder agreement permits shareholders to manage the corporation informally, according to the provisions of the agreement, without observing corporate formalities related to director and shareholder meetings and make decisions in areas usually reserved for the board of directors, such as dividend policy, distribution of assets on liquidation, selection of officers, and determination of their compensation and tenure.
Shareholder agreements protect the business and the shareholders in the event of a dispute.
Back to the Top
|