What is Shareholder agreement?

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A shareholder agreement is a legally binding contract between the shareholders of a company that outlines their rights, responsibilities, and obligations. It governs the relationship between shareholders, how the company will be managed, and how key decisions will be made. In Switzerland, shareholder agreements are commonly used in private companies, particularly AGs and GmbHs, to ensure clarity and prevent conflicts among shareholders.

Key Elements of a Shareholder Agreement

  1. Shareholder Rights and Obligations
    • Defines the rights of shareholders, including voting rights, dividend distribution, and rights to sell or transfer shares.
    • Specifies obligations, such as maintaining confidentiality or non-compete clauses.
  2. Management and Decision-Making
    • Outlines the decision-making process for important business matters, such as the appointment of directors, changes in the company’s structure, and major financial decisions.
  3. Dispute Resolution
    • Provides mechanisms for resolving disputes between shareholders, such as mediation, arbitration, or specific procedures to follow in case of disagreements.
  4. Exit and Transfer of Shares
    • Establishes the rules for transferring shares, including the right of first refusal or buyback clauses, ensuring that shareholders have control over who can join or exit the company.

Importance of a Shareholder Agreement

A shareholder agreement is crucial for setting clear expectations and preventing disputes among shareholders. It provides a framework for managing the company and protecting the interests of both minority and majority shareholders. In Switzerland, having a well-drafted agreement ensures that business operations run smoothly and in compliance with Swiss corporate law.