Understanding Shareholders’ Agreements: Clauses That Matter

Introduction:
A Shareholders’ Agreement (SHA) is a foundational document that governs the relationship between shareholders and the company. Whether you're a founder or investor, knowing the key clauses can save you future legal battles.

1. Essential Clauses to Know

• Pre-emptive Rights: Prevent dilution of shareholding.
• Drag-Along & Tag-Along Rights: Ensure fair exit mechanisms.
• Voting Rights & Reserved Matters: Establish governance norms.

2. SHA vs. Articles of Association

• SHA is a private contract; AoA is a public document filed with the ROC. Both must align to avoid enforceability issues.

Conclusion:
A well-drafted SHA protects interests, prevents disputes, and promotes business continuity. Always consult legal counsel before signing one.