Shareholders' agreements are a very important part of corporate law.
Conceptually, it is nothing more than an agreement made between some or all of the contributors (shareholders) with the purpose of laying down the contributors' rights and obligations in relation to their shareholdings in the company.
The company laws and the very detailed regulation contained therein do not specifically mention or include the agreements made between the shareholders of a company.
There is nothing to prevent a single individual or another company from owning the entire capital of a limited company or a private limited company. However, the share capital is usually distributed between several shareholders.
In general, the company law regulates the relations between a company and its shareholders, but not the mutual relations between the shareholders. In the latter case, there is a large degree of latitude and this is one of the main reasons why there is so much focus on shareholders' agreements in connection with the formation of companies with more than one contributor (shareholder).
In addition to the fundamental points in a shareholders' agreement containing provisions on pre-emption rights in case a shareholder wishes to sell his shares, the contents of a shareholders' agreement range from provisions on the election and composition of the board, dividend and the parties' rights in case of a takeover (typically the minority shareholders' right to sell) to provisions on rights and obligations in connection with a stock exchange flotation of the company and issues in relation to competing activities between the parties.
Depending on the specific situation and the distribution of shares, a shareholders' agreement can also contain provisions to the effect that the distribution of votes - although different on paper - must be equal, perhaps over a certain period of time.
Usually, the shareholders' agreement is given a seal of approval in as much as it is agreed that in all relations between the parties the shareholders' agreement shall take precedence when the contributors' rights and obligations are decided on and shall - to the largest possible extent - also take precedence over the company's Articles of Association and the company law.
To someone who is considering contributing as a minority shareholder it is especially important to have a certainty of his rights, however just as often a dominant shareholder wishes to secure his rights beyond the provisions of company law, even though he may have the absolute majority of the votes.
In start-up companies, especially in the IT and biotech sectors, a shareholders' agreement often contains provisions that must be met in relation to the continuous technological development (milestones) before some shareholders are under an obligation to invest further.
The preparation of shareholders' agreements is an important part of Plesner's business consultancy services. We have a great deal of experience in drafting such agreements and in regulating multinational situations with regard to Danish companies.