If you`re starting a business with other shareholders in India, it`s essential to have a shareholders` agreement in place. A shareholders` agreement is a legal contract between the shareholders of a company that outlines the rights and obligations of each shareholder. It`s crucial to have this agreement in place to avoid any misunderstandings or conflicts down the line.
While it`s always advisable to consult a lawyer to draft a shareholders` agreement, there are several templates available online that you can use as a starting point. In this article, we`ll take a look at some of the key provisions you should include in a shareholders` agreement template for India.
1. Shareholding and Capital
Your shareholders` agreement should clearly state the number of shares each shareholder holds and the capital they have contributed to the company. It should also outline how any new shares will be issued and how the capital will be increased if needed.
2. Board of Directors
The shareholders` agreement should also include provisions on the composition and role of the board of directors. This includes how many directors there will be, how they will be appointed, and the powers they will have.
The shareholders` agreement should set out the decision-making process for the company. This includes how meetings will be called, how voting will take place, and what majority is required to pass a resolution.
4. Transfer of Shares
The shareholders` agreement should also include provisions on the transfer of shares. This includes how shares can be sold, the process for transferring ownership, and any restrictions on who can own shares in the company.
5. Dispute Resolution
Finally, the shareholders` agreement should outline the process for resolving disputes between shareholders. This could include mediation, arbitration, or going to court.
While these are just some of the key provisions that should be included in a shareholders` agreement template for India, there are many other important clauses to consider, such as non-compete agreements, confidentiality agreements, and termination clauses.
In conclusion, having a shareholders` agreement in place is essential for any business with multiple shareholders in India. While it`s always advisable to consult a lawyer to draft a customized agreement, using a template as a starting point can help ensure that all the key provisions are included. By taking the time to draft a comprehensive shareholders` agreement, you can protect your business and avoid any potential conflicts down the line.