When we talk about any shares, several questions have been asked about the shareholders agreement template South Africa which are guided and answered with the different legal documents platforms.
They explains the legalities of the SHA, to address the 6 reasons that could make the difference in your situation
Control over valuing and pricing the shares
The Shareholders Agreement contains provisions for how the shareholders are to value or price the shares in the Company. The Shareholders Agreement can stipulate that the shareholders must either reach agreement as to the value of their shares or use a predetermined formula. Furthermore, the Shareholders Agreement can require the use of an independent expert if the Shareholders cannot reach agreement.
Regulate management of the Company
The Shareholders Agreement should contain provisions dictating how the Company should be operated which should include detail as to the Shareholders’ rights and obligations. It is also important to contain provisions in the Shareholders Agreement that regulate how the Company Shareholders are to appoint directors of the company.
Control the transfer of shares
Your Shareholders Agreement should contain mechanisms to prevent a Shareholder from selling shares in the Company without the consent of the remaining Shareholders. Therefore, such mechanisms ensure that both minority and majority shareholders are protected. These mechanisms are often described as come-along and tag-along clauses and are described in greater detail in this article.
Resolution of disputes
Your Shareholders Agreement must contain provisions as to how the shareholders are to resolve disputes that may arise between them as to the management of the Company.
Can be used to secure funding and offer investors insight into your business
If you are looking to raise capital in order to start your business or you are looking to bring on investors or friends, a well drafted Shareholders Agreement can often seal the deal. Investors will often require a written Shareholders Agreement to ensure that their investment is secured and to ensure that there are certain protection mechanisms in place. With a well drafted Shareholders Agreement in place,
Can regulate a varied dividend policy
Your Shareholders Agreement must contain provisions which direct when and how dividend is paid out to the shareholders. Such a provision can include directions for the time and circumstances which need to be met before a dividend is paid out.
Many Legal Documentation Firm like Hello Contract meet all the legitimate requirement of share, to solve all the 6 major reasons for the share holders.
In terms of the Companies Act, pre-emption rights only apply to a fresh issue of shares and not to the transfer of existing issued shares. Therefore, the default position is that you as a shareholder are not automatically, by virtue of your shareholding, entitled to a pre-emptive right to your fellow shareholders’ shares.
In order to ensure that you have the abovementioned pre-emptive right you need to include provisions in your shareholders’ agreement which deal with such pre-emptive rights. This provides existing shareholders with greater certainty and protection.
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Source: https://hellocontract.co.za/blog/benefits-of-a-shareholders-agreement/
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