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Dividend Policy
Is there a pre-agreed proportion of the profits to be paid out as dividends?
Confidentiality Policy
This is an obligation on shareholders to keep information regarding the company confidential.
Financing Policy
Will monies be provided to the company by the shareholders in the future?
Issuing further shares
This is the ‘non-dilution’ clause which is a clause that protects shareholders from their share in the company being diluted and enables them to maintain their percentage share in the company.
Appointment of Directors
Should the shareholders have a right to appoint directors to the company?
Directorships
Should a shareholder still be allowed to be a director if they sell their shares?
Chairman
Should there be a named person who is chairman or should this position be given on a rotating basis?
Casting Vote
Will the chairman have the deciding vote when there is an equal amount of votes?
Pre-emption rights
This is where a shareholder wants to dispose of their shares, he must offer the shares to the remaining shareholders before they are made available to anybody else.
Permitted and prohibited transfers
Where a shareholder is permitted to freely transfer their shares to a particular group of people (e.g. spouse or children) without getting approval from the other shareholders or prohibited from transfer.
Drag-along rights
This enables a majority shareholder to force a minority shareholder to join in the sale of a company.
Tag-along rights
If a majority shareholder sells their stake, this right protects the minority shareholder and allows them to join the transaction and sell their stake on the same terms and conditions as would apply to the majority shareholder.
Compulsory Share Transfers
A set of clauses that determine the circumstances where a shareholder is required to transfer their shares to the remaining shareholders (usually on leaving the company).
Deed of adherence
If a new shareholder joins the company you need them to become a party to the shareholders’ agreement.
Share options
This is a right to buy shares in the company at a fixed price sometime in the future. The right to buy could be triggered by a certain set of requirements being met.
Deadlock resolution
Where shareholders are unable to agree this clause will determine how the disagreement should be resolved.
Restrictive Covenants
A clause to prevent a shareholder from competing with the company after they have left.
Shareholder protections
Should certain decisions made by the board of directors be subject to consent from the shareholders?