There are also some risks associated with implementing a shareholder agreement in some countries. A shareholders` pact is a private agreement between shareholders. A company`s statutes are a public document and companies are legally required to comply. The two documents govern the company`s action and may overlap. So they have to make sure they are consistent. In most countries, registering a shareholder agreement is not necessary for it to be effective. Indeed, it is the greater perceived flexibility of contract law in relation to corporate law that provides much of the rationale for shareholder agreements. Each agreement will balance the interests of shareholders in different ways, including: it is very easy to add sectoral provisions to your agreement, but they always tend to boil down to questions of power or policy. In addition, shareholder agreements often provide that up-to-date commissions along and drag along are essential if you expect balances that not all shareholders could accept. Each shareholder wants to maximize the value of their investment, so why not supplement the company`s items by using this shareholder pact to prevent conflicts and protect minority shareholders. This simple shareholder pact between some or all of your company`s shareholders can be the best way to ensure stability and continuity. The right to a first refusal can help protect against an undesirable foreigner who buys into the company if one of the other shareholders decides to sell. In strict legal theory, the relationship between shareholders and those between shareholders and the company is governed by the company`s constitutional documents.
[Citation required] However, for a relatively small number of shareholders, such as in a start-up, it is common in practice for shareholders to complete the constitutional document. There are a number of reasons why shareholders wish to complete (or take over) the company`s constitutional documents: this short shareholder contract is intended for private companies in which each shareholder holds the same share, so that there are no minority shareholders or majority shareholders. Therefore, there is no bias in the agreement with respect to a certain type of shareholder. Minority shareholders will likely want more control over decisions that affect the value of their stake than the law gives them by default.