Shareholder Agreement South African Law

The Court rejected the award of the order and stated that the award of the new MOI had been legal and in accordance with the requirements of the Corporations Act. The shareholders` pact was so against me that it was in fact null and void. Would you like to sign a new shareholder agreement that is relevant to South Africa? There are good reasons to do so. It is important that the shareholders of each company sign an agreement, preferably at the beginning of the relationship. Co-ownership (like many people holding shares in a business) is the mother of all litigation. Essentially, a shareholder contract will prevent disputes and conflicts in the future. It records the answer to the questions that each shareholder should answer. As soon as two or more people decide to participate jointly in the transaction, the shareholders` pact should be the first document to prepare and sign. Often, this document is developed from the beginning or when companies are set up to discuss and finalize aspects of their relationship that might otherwise not have been covered. The MOI is the top ranking of the two documents. However, it is a public document, so some of the issues that shareholders want to govern more confidentially need to be addressed in the shareholders` pact. Any point of the shareholders` pact that is in conflict with the MOI is null and void and not entitled.

It is therefore important that both documents be prepared simultaneously. We have helped many customers with a shareholder pact and we have developed many smart ways to formulate it quickly and easily. For example, the use of questionnaires and templates. Ours are worded in plain language and contain the last alternative dispute resolution clause. One company published a new ME in 2012. This I ME opposed the shareholders` pact and some shareholders applied to the Court to adopt an order regulating shareholders` relations and thus replacing the MOI. The shareholders` agreement contained a non-variation clause stating that no changes could be made to the agreement unless all shareholders agreed in writing. For those who start a business in South Africa, it is important to consider the benefits you need or not from a shareholder pact.

Please note that the information below uses the term “shareholders` pact” in the general sense of the term, as it also applies to those who participate in a close corporation, the only change being that it is called a “member agreement.” It is no longer possible (as of May 1, 2011) to adopt a shareholders` pact that prevails over the Memorandum and Companies Act. You may need to amend your company`s memorandum before or at the same time as signing a new shareholder pact. In other words, you must first develop a memorandum for the company, then a shareholder contract, which is in accordance with both the shareholder law and the memorandum. You may find that the agreement is no longer necessary once you have drafted a memorandum. However, it is unlikely that an agreement will always play a very important role. When negotiating a shareholders` pact, it should be noted that each shareholder may have different motivations for concluding such an agreement. These motivations are based on several factors, such as the share of shares held by a shareholder and the respective obligations of the shareholder.

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