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Clearly define ownership rights, decision-making powers, share transfers, and dispute resolution mechanisms to safeguard stakeholder interests in your company.
A Shareholder Agreement is a vital legal contract among a company’s shareholders that governs their relationship, rights, responsibilities, and how the company is managed. It addresses share ownership, voting rights, dividend distribution, share transfers, and procedures in case of disputes or exit. This agreement helps prevent conflicts and ensures smooth governance within the company.
A properly drafted Shareholder Agreement generally includes:
Shareholder Agreements in India are primarily governed by:
Yes, it is enforceable under Indian contract law when signed by all parties.
The AOA is a public document registered with ROC. A Shareholder Agreement is private and can offer more detailed and flexible terms.
No, the AOA takes legal precedence. Any conflicting terms must be aligned through amendments to the AOA.
Absolutely. It’s especially important in private companies with multiple shareholders to avoid misunderstandings and legal issues.
The agreement must be updated or amended to include new shareholders and any changed terms.
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