We at New Balkans Law Office regularly advise businesses as they navigate particular corporate law issues. We offer support by organising our clients’ internal affairs, which includes drawing up shareholders’ agreements (‘SHAs’), investment agreements, employee stock ownership plans (or ‘ESOP’ agreements), loan facilities, etc.
As we constantly work to contribute to the local ecosystem, we proudly announce that our team has created a model SHA designed to help early-stage companies. By providing this user-friendly legal framework, we aim to assist early-stage companies in navigating the relationship between founders and investors. You can download the model SHA here.
The Shareholders’ Agreement (SHA) is a multi-party contract dealing with various possible issues among some or all shareholders in a company. In addition to setting out shareholders’ rights and obligations, SHAs lay the foundation of how a company will be organised, financed and managed. SHAs are especially useful to burgeoning businesses, as they offer a cost-effective way of preventing future issues by laying a framework to deal with certain legal matters.
As there is no statutory requirement for company shareholders to enter into an SHA, the agreement can be flexible regarding the provisions it contains and the issues it addresses.
An SHA is a favourable addition to a company’s statutes, as it may:
● Allow shareholders to make detailed arrangements privately;
● Signal the maturity of the founding team to investors;
● Impose requirements concerning decision-making (e.g., while some fundamental resolutions pertaining directly to the business structure may require a unanimous decision by all shareholders, more minor decisions may simply require a majority vote);
● Restrict transfers and ownership of shares;
● Address how the company will access funds and whether the shareholders are responsible for contributing such funds following their relative interest in the business;
● Provide exit strategies in the event that the shareholders can no longer be in business together.
You can read more publications from the New Balkans Law Office at the links below.