Here are some sample clauses taken from our shareholders agreement template.
2. Undertakings and Accession
2.1 The Parties shall take such steps as for the time being lie within their power to procure and ensure that, within [number e.g. 30] days from the date of this Agreement, any constitutional documents of the Company, including without limitation the Memorandum and Articles, are amended and adopted as necessary to be made consistent with the terms and conditions of this Agreement. In the event of any conflict between the terms and conditions of this Agreement and the Memorandum or Articles, this Agreement shall prevail.
2.2 Each Shareholder and the Company undertakes with the other Shareholders that it shall procure and ensure that no issue or transfer of Shares shall be effected unless such issue or transfer is effected as permitted by and in accordance with the provisions of this Agreement.
2.3 The Parties each agree that they shall not register an allotment of new Shares or execute a transfer of existing Shares unless such allottee or transferee, if not already bound by the provisions of this Agreement, executes a legally binding undertaking to be bound by the terms of this Agreement as if an original party hereto. Upon the execution of such undertaking, such allottee or transferee shall be deemed, for the purposes of this Agreement, to be a Shareholder and shall be subject to all the obligations and entitled to all the benefits created in this Agreement with respect to Shareholders.
2.4 The Company may establish an employee share option scheme on terms and conditions to be approved in writing by the Board of Directors (the “ESOS”). The total number of Shares in respect of which the Company may grant options, when added to the number of Shares issued and which would be issued upon the exercise of all outstanding options under the ESOS, shall at no time exceed [number e.g. 10] percent of the enlarged issued share capital of the Company.
3. Business of the Company
3.1 The Parties agree that the principal activity of the Company (the “Business”) shall be [thorough description of what the company does or shall do].
3.2 The Company undertakes to and covenants with the Shareholders that:
(a) the Company shall not, without the prior written consent of the Shareholders, depart from the Business or carry on any business activity which is not ancillary or incidental to the Business; and
(b) the Company shall conduct its highest value-added activities and shall be headquartered in [country]; and
(c) in the event of any material change to the financial forecasts or funding needs as stipulated in the Company’s business plan provided to the Shareholders whether prior to, on or after the date hereof, the Company shall inform the Shareholders of such change as soon as practicably possible.
9. Rights of Information
9.1 The Company shall promptly furnish to the Shareholders, to such extent and in such form and detail as may from time to time reasonably be required, particulars of any matters concerned with and arising out of the Business and in particular but without prejudice to the generality of the foregoing:
(a) a quarterly profit and loss statement of the Company, within [number e.g. 30] days after the end of each calendar quarter (or such later date as the Shareholders may agree in writing);
(b) the final annual accounts and financial statements of the Company for each financial year within [number e.g. 90] days after the end of each financial year (or such later date as the Shareholders may agree in writing;
(c) an annual budget and business plan of the Company for the next financial year not later than [number e.g. 30] days before the start of each financial year (or such later date as the Shareholders may agree in writing);
(d) copies of the Company’s filings, releases and announcements made with or to any corporate registry or regulatory authority immediately upon such filing, release or announcement;
(e) minutes of all meetings of the management or Board of the Company (whether or not such meeting was attended by all the Shareholders) which record decisions that materially affect the Business or the financial state or condition of the Company within [number e.g. 7] days after the date of such meeting.
9.2 The Shareholders shall be entitled at any time to inspect and take copies of all books and records of the Company, including, but not limited to financial records.
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