These restrictions are often granted in favour of the investing party or in other types of shareholder agreements in favour of the company itself. In the initial phase, companies that rely heavily on the developers involved and their knowledge and contacts of these types of restrictions play an important role in demonstrating a promoter`s commitment to the company and, as I said, are often solicited by venture capital and other third-party investors. These provisions are also important, with the exception of venture capital situations, as many firms are particularly vulnerable to a developer who leaves another place to make purchases, perhaps hire some of the existing company`s staff and compete with the existing business. Regardless of this, the overall participation must be clearly explained, usually in a schedule of the agreement, so that it can be easily modified if you bring investors on board or withdraw certain shareholders from their stake. In short, the shareholders` pact tells shareholders, directors and other related companies what they can and cannot do. Indeed, many entrepreneurs have lost control of their companies due to poorly developed shareholder agreements. I hope that the above discussions will give you a better understanding of the purpose and nature of shareholder agreements and the issues that arise most often in relation to shareholder agreements. It goes without saying that there would be specific considerations regarding certain types of shareholder agreements, such as a joint venture or venture capital investment, which are outside the scope of this document. I would also like to say that I think it is wise to enter into a shareholders` pact which also envisages the inclusion of appropriate service agreements with important members of the management team as long as they are not yet in place. In private companies, it is customary to impose an obligation on a shareholder who wishes to sell his shares in order to allow some or all of these co-shareholders to buy them. These are also called „pre-emption rights” and are usually found in the statutes for reasons that I will explain later. The management of a company is not taken over by the shareholders.
Despite common misunderstandings, shareholders have very limited rights to documents/decision-making processes. It is the company`s executives who make the day-to-day decisions. While in most cases the directors are also shareholders, this is not always the case. I have also already mentioned that the Association Agreement and the Statutes should be developed to avoid inconsistencies. In order to deal with the possibility of inconsistencies between the two documents, it is normal to include in the shareholders` pact a „superiority clause” which provides that in the event of a conflict, the provisions of the shareholders` pact are given priority for the decision on the conflict. It is extremely important that such a supremacy clause be developed with great care.