At Vasiliou Law we believe that shareholders agreements (SHA) are essential for all companies.They are usually drafted to make sure all shareholders are made aware of their obligations towards each other, as well as of their rights. This agreement is a private contract between the members of the company containing, amongst others, the rules for running and owning the company.
SHA’s regulate matters in the event of a deadlock. Even though they are not legally required we recommend entering into a SHA before any company that we incorporate. We offer tailor-made solutions for shareholder’s agreements drafted specifically to avoid future conflicts between the members of a company.
From our experience SHA’s should be drafted to clarify the following areas:
- Shareholders’ rights and obligations;
- Regulate the issuance, transfer and sale of shares of the company;
- Regulate the appointment and resignation/removal of Directors;
- Set out provisions to resolve deadlock situations;
- Regulate the amount and way of declaring dividends; and
- Set out provisions for dispute resolution procedures.
It should also be noted however that any term of the Shareholders’ Agreement which contravenes any statutory provision of the Law ( Cyprus companies Law cap.113 ) is considered invalid under Cyprus Law.In addition to this point a shareholders’ agreement and the articles of association of a company should be consistent with one another.
The drafting of a shareholders agreement should be carried out by an experienced lawyer who are able to provide proper advice and assistance tailor made to the specific facts of each case. This is what we endeavour to provide at Vasiliou Law.