Q&As

Where a person (shareholder A) who originally proposed to be a shareholder in an investee company, further to executing a shareholders’ agreement in respect of such investee company, agrees not to become a shareholder in such company, can the other signatories to such shareholders’ agreement terminate the agreement without the written agreement of shareholder A?

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Published on LexisPSL on 16/10/2019

The following Corporate Q&A provides comprehensive and up to date legal information covering:

  • Where a person (shareholder A) who originally proposed to be a shareholder in an investee company, further to executing a shareholders’ agreement in respect of such investee company, agrees not to become a shareholder in such company, can the other signatories to such shareholders’ agreement terminate the agreement without the written agreement of shareholder A?

A shareholders’ agreement is a private agreement entered into among the shareholders of an investee company and the investee company itself, to govern, alongside the investee company’s articles of association, the operation of the relevant company. The agreement may also set out the terms of the subscription for shares in the company by the various shareholders in the company, and, in such instances, may be known as either a subscription and shareholders’ agreement or an investment agreement. By way of example, see clause 2 of Precedent: Subscription and shareholders’ agreement—single investor.

Where there is a change in the contractual obligations of a party, that change will ordinarily need to be documented as a contract variation and will need some form of consideration

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