The Benefits of a Shareholders Agreement

Shareholders Agreement Benefits

A Shareholders Agreement benefits an Irish company as it grows and changes. Harmonious thinking within the company is key to conducting business in a way that ensures both success and security. Of course, this can’t always be possible and this in many respects is where a Shareholders Agreement comes in. Under the Companies Act 2014 there are very little provisions outside of the basic when it comes to the powers and rules that govern Shareholders as known as Members. The benefits of Shareholders Agreement are that companies can define the was that shareholders interact as well as fully explore the intricacies of all aspects that relate to share classes.

Within an agreement, there are two distinct sections which can either be rolled together as one document or split into two distinct documents, the Core or main body of the agreement and the additional options section.

The Core Shareholders Agreement

The Core is, as the name suggests, the main common elements to be found in the agreement. This section builds on the basis laid down in the Companies Act 2014 and provides greater detail on how shares are dealt with, covering many sections including:

  • Setup costs
  • Fundamental disputes
  • Transfer of Shares
  • Objectives
  • General management of the company

This Core section outlines in great detail how the day to day management of the shareholding and power within the company should be distributed. It will also safeguard against disputes and tied voting situations that could otherwise hinder the progress of a company.

The Shareholders Agreement Options

The second part of a Shareholders Agreement steps completely away from what would be governed in part by the Companies Act 2014 and the Constitution of the company. The optional clauses section can cover a wide range of eventualities within a company focusing on future success and avoiding pitfalls. Just some of the pieces that can be covered here are:

  • How a company is sold
  • What happens when a shareholder wishes to leave the company
  • Who has the power to appoint Directors
  • Who is owed money on Liquidation
  • Treatment of loans to and from investors
  • New share offers
  • Succession rights

As can be seen from the above, the options section of the agreement is fully customisable to ensure that the future of a company is handled securely and in the exact way the shareholders intend from inception. The Benefits of a Shareholders Agreement are customised to your company’s specific requirements.

If you would like to draft a shareholders agreement or learn more about shareholders agreement benefits please Contact Us today. A member of Company Secretarial team would be happy to assist you with securing the future of your business or any matters relating to Company Law.