Shareholders’ agreement

Shareholders’ agreement: a private contract which shareholders of the company may choose to enter into to specify how they will behave in relation to the company. The company itself is usually not a party to this agreement. The benefit of a shareholders’ agreement is that it can help address matters that are important to shareholders, such as agreement on dividend policy, future financing, method of dispute resolution or what should happen if a deadlock is to arise in decision-making. Also, shareholders’ agreement can include provisions dealing with tag along and drag along rights as well as the transfer of shares. Please see our articles discussing both types of provisions in shareholder agreements for more detail.