07 Okt Shareholders Agreement Vs Share Purchase Agreement
As a general rule, a share subscription agreement must include the number of shares that the company issues to the shareholder, as well as the order and date on which the shareholder makes the payment. A share subscription contract varies considerably according to the needs of each company, but some of the general clauses contained are confidentiality, compliance with the condition precedent, tranches as well as guarantee and compensation. Shareholders are generally considered to be the true owners of the business. The agreement between both the company and the shareholders, which describes the rights of the debt, is called a shareholders` agreement. Where a shareholder makes an offer to purchase the shares of another shareholder, the shareholder receiving the offer must either (1) sell his or her shares at the offered price or (2) purchase the shares of the shareholder who made the offer at the same price and on the same terms. A shareholder agreement is concluded in order to protect investors` investment by defining the rules and regulations of a shareholder. All shareholders are entitled to financial and management reports of the company, usually provided annually. Larger shareholders may be granted the right to report monthly or quarterly. Larger shareholders can also negotiate the right to access company documents, including company visits, personal interviews with company executives, and the ability to copy records.