How to organise my shareholding?

Shareholder Agreement
Three factors have an impact on the laws and statutes of the company: the legal form of the company, the number of shareholders and the social capital. For example, Limited Companies can opt for an executive board. Your statutes include a certain number of provisions regarding your shareholding’s organisation and the managing rules.
When investors or partners acquire a stake of the capital of your company, you might want to prepare a shareholder agreement. The rules of this confidential document complement the articles of association of your company. It governs the rights and duties of every shareholder and how they should interact. It should include multiple categories of clauses, including those related to changes in the capital, to the management of the company and to the duties of the founders and of the managers.

The clauses governing changes in the capital enable the shareholders to exert control on the capital of the company; to know the identity and potentially prevent new shareholders from investing in the company. In a wider sense, it allows shareholders to have a certain control on the sale and purchase of the company’s shares:

  • The pre-emption clauses grant shareholders a right of pre-emption. This means that in the event that one/some of the shareholders want to dispose of their shares in the company, the existing shareholders have a priority over any potential buyers providing that it be on the same conditions. The pre-emption clause also makes it possible to set an order of priority according to the categories of shareholders (founder, investor, and manager).
  • The terms of preference compel the shareholder who wants to dispose of his shares to offer them to the other shareholders before approaching third parties.
  • The clauses of inalienability commit the shareholders not to dispose of their shares for a specified period of time.
  • The terms of consent can allow selling one’s shares to a shareholder who obtains the agreement of the other associates, the latter accepting the buyer as a new associate.

The shareholder agreement organises the company’s liquidity, or the sale of company shares to a third party, to enable investors to increase their investment.

  • Exit clauses and agreement to cede allow minority shareholders (shareholders who have a non-controlling share in the capital of the company) to leave at the same time as a majority shareholders who could dispose of his shares, which prevents them from having a new majority who they do not wish to collaborate with.
  • A clause of compulsory transfer of shares forces minority shareholders to dispose of their shares and enables the total transfer of shares to a third person and secures the sale of the company.
  • A liquidity clause can, if a company has not received a takeover bid of its shares, allow shareholders to find a solution enabling the sale of all of the shares.

The shareholder agreement can include terms related to the governance of the company.

  • A company necessarily requires a legal representative, but another oversight body can be established to control his or her decisions, and even sometimes to replace him or her. A strategic committee composed of representatives of the categories of shareholders (founder, investor, manager) and other independent persons (e.g. industry experts) can fulfill diverse functions according to the terms of the agreement. Thus, the instituted committee can make advisory, decision-making, and binding decisions.
  • The agreement can also provide a platform to highlight the powers of a director, in particular, an Executive Director.
  • Exclusion clauses can include the terms for the dismissal of a Director guilty of reprehensible behaviour and for the exclusion of a shareholder under certain circumstances.

The agreement can impose clauses related to the obligations of founders and directors or certain categories of shareholders, working for the success of the company. For example, non-competition and exclusivity clauses compel concerned parties to concentrate all their efforts to the benefit of the company.


Depending on the countries, the law offers more or less sophisticated means to organize the relationships between associates. The same principles and stakes usually rule the law of companies and consortiums. First of all, the shareholder agreement is a contract; it is paramount to refer to the contracts law and the obligations that apply to your country. “Company law and the shareholder agreement provide the entrepreneur with a legal kit enabling him or her to organize the good relationships between associates. It is important to use them intelligently as soon as the company reaches a certain size.” Pierre Callède, partner, Vaughan Avocats.