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This agreement regulates the purchase and sale of shares in a company. It regulates important matters like the purchase price, payment details, transfer mechanisms, confidentiality, dispute resolution. If the seller remains a shareholder in the company, or if there is more than one shareholder in the company after the transaction, please remember that it is critical to also conclude a proper shareholders agreement (which should also be supported by a new Memorandum of Incorporation).
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A shareholders agreement is fundamentally important to your business. There are numerous issues that can arise that can give rise to serious disputes between shareholders and more often than not, shareholder disputes can jeopardise the entire business. It is also vital that a shareholders agreement is concluded in conjuction with the Memorandum of Incorporation for the Company, particularly as the Companies Act 2008 provides that in relation to certain vital aspects a Memorandum of Incorporation will override and take precedence over a shareholders agreement.
One of the mechanisms for acquiring shares can be by way of subscribing for shares in a company. It is important that the company’s authorised share capital is sufficient and also that the requirements of the company’s Memorandum of Incorporation are complied with.
A share buy back agreement is concluded when the company buys back some of its shares. These agreements require compliance with the company’s Memorandum of Incorporation as well as the Companies Act, 2008.
When appointing a non-executive director – it is strongly recommended that a written contract is put in place. This ensures that the non-executive director’s obligations are outlined, that the termination provisions are clear and that the remuneration is properly documented.
