What is a shareholders' agreement?

A Shareholders' Agreement is a contract between the shareholders of a company in which arrangements are laid down regarding their shareholding and cooperation within the company. This agreement provides clarity in situations that are not or insufficiently regulated in the Articles of Association or law, thereby clearly establishing the rights and obligations of shareholders.

Common elements in a Shareholders' Agreement are:

• Decision-making and voting rights in the management board
• Appointment and remuneration of directors
• Valuation of shares in the future
• Non-compete clause
• Dividend policy
• Handling of disputes
• Sale of shares and dealing with departing shareholders.
• Obligation to contribute capital in certain situations

In agreements with investors, part of the Shareholders' Agreement is often based on a previously signed term sheet.