Categories

News

Apr 2021
11

Reference To Shareholders Agreement In Articles

by admin in category

While it is customary for a shareholder with a significant interest to hold a position on the board of directors of a corporation, the laws of the companies are not entitled to see a shareholder who holds a minority interest occupy a position on the board of directors of a company. In addition, standard statutes do not offer such a right. It is therefore important that a minority shareholder who wishes to have a seat on the board of directors provide for it in a shareholders` pact. You will often find that such a right to a board seat is conditional on the shareholder retaining some minimum stake in the company and/or continuing to be an employee of the company (or a related company). In addition, consideration should be given to whether the right to appoint a director is personal (i.e. the shareholder can only appoint himself) or whether he can appoint another party in his place. In addition, it is also appropriate to consider whether the right to appoint a director can be invoked by a person who acquires the shares of the original shareholder. The answers to these questions are ultimately dictated by the facts of each situation. In shareholder agreements, it is customary to provide that a number of scheduled board meetings are held at regular intervals and are convened on a certain notice and that they are accompanied by an agenda and board documents. The shareholders` pact may also provide for the convening of emergency meetings by a shorter time frame.

It is also customary to provide that a certain number or certain directors must be present at each board meeting in order for it to be unscrewed. If such a quorum requirement is included, I normally propose to add an additional provision that, in the absence of the required quorum, the meeting is deferred simultaneously to the same location for a specified period (. For example, a week or two weeks) and that the meeting with the directors present, reconvened, will continue to review the operation on the agenda of the previous session. In the absence of such a provision, one or more directors could attempt to use the quorum requirement mischievously by refusing to participate in board meetings, thereby preventing the company from acting through its board of directors. It is customary to note that individual promoters of a company may hold in their personal names certain valuable rights that are used by the company (for example.B. rights to the source code or other IPs, domain names, trademarks, etc.). It is common for proponents to have done a significant amount of preliminary work prior to the creation or start of the trade, and proponents may, with the best of intentions, have acquired such valuable rights in their own name in order to transfer them to the business, but cannot reach the business. In the end, this can have unfortunate consequences for a business if relations with a developer holding such rights are broken and such a developer claims ownership of those rights.