1 July 2010 by Vincent Billings

Shareholders protecting your position – Shareholders Agreements for minority and majority shareholders

Whether you are a minority shareholder or a majority shareholder in a company, an issue to consider at an early stage is how to contractually protect your position within the company.

Minority shareholders will want protection from the majority shareholders misusing their powers of control. To address this, minority shareholders should seek to include rights and protections in a shareholders agreement or in the company’s articles of association. Such rights and protections include rights to block major decisions, protection from their shares (and value) being diluted, access to information regarding the company’s affairs, board representation and mechanisms to exit the company.

Majority shareholders protection will depend on the extent of the majority’s shareholder’s voting strength and board control. Generally, the greater the majority shareholders voting strength and board control the lesser the need to reinforce the protections in a shareholders agreement or articles of association. However, a majority shareholder may only be an investor in a company and may not want to be part of the management of the company. In these circumstances given the lack of managerial control of the business affairs of the company by the majority shareholder, it may be appropriate to include the protections set out above to apply to a majority shareholder.

If these rights and protections are incorporated in the articles of association the shareholders must be aware that the articles of association will be publicly available. A shareholders agreement will generally be a private confidential contract between the shareholders and usually the company.

28 May 2010 by

Services Charges: Striking a balance

The recovery of service charges can sometimes be an area of contention between landlords and tenants, often leading to one […]

4 June 2010 by Matthew Miller

Bribery Act 2010

As a result of the enactment of the Bribery Act 2010 on 9 April 2010, in the public and private sectors, it is now an offence for any UK person or business, operating in the UK or aboard.

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