Do I need a Shareholders Agreement?
Can you answer the following questions?
- What happens if a shareholder wants to add another partner to the company but there is disagreement?
- What happens if there is a deadlock and the Shareholders cannot agree on company matters?
- What is each shareholders’ roles and responsibilities and powers to make decisions?
- When and how do you pay dividends?
- What happens if a shareholder wants to sell their shares?
- After leaving the company can a shareholder compete with the company?
If you can’t answer many of these questions with certainty they are likely to become issues and points of disagreement and uncertainty when the situations arise.
The Shareholders‘ Agreement is a Business ‘Prenup’ between the shareholders of a company which sets out the shareholders‘ rights, duties and responsibilities along with the foundation of how the company will be set up, managed and run.
The Memorandum of Incorporation or MOI is the company’s most important founding document and is the sole governing document of the company. It is binding between the shareholders themselves and between the company and each director or public officer.
An MOI must be filed with the Companies and Intellectual Property Commission (CIPC). This is why our MOIs have been carefully designed to speak to the formation and agreements set out in the Shareholders‘ Agreement and the Companies Act.