There are two common aspects that create and establish the relationship between the two parties. This is the shareholder contract and the share purchase agreement. One party uses it so that the other party that invests can also participate in the process. The shareholders` pact is a mechanism that protects the company from losses and protects the interests of the company. Each shareholder pact must have the important provisions mentioned above to strike a good balance between the interests of the company and those of the shareholder. 3. Share Purchase Agreement (SPA) – A share purchase agreement is entered into at a time when you are associating an investor/partner with your business. This document contains the basic conditions for buying and selling shares. The share purchase agreement indicates the number of shares and the consideration against which the shares are exchanged. The BSG also lists the conditions that must be met to complete the sale (previous conditions) and replacements and guarantees that affect both the company and the entrepreneurs to the buyer/investor and vice versa. A shareholders` pact contains a date, often the number of shares issued, a capitalization table (or “cap”) that lists the shareholders and their share of the company`s ownership, the possible restrictions on the transfer of shares, the pre-emption rights of the current shareholders for the acquisition of shares (in the case of a new issue to maintain their share of ownership) and the terms of payments in the event of a sale. In addition, shareholder agreements often provide that, in most countries, the registration of a shareholder contract is not necessary for it to be effective. Indeed, it is the greater perceived flexibility of contract law in relation to corporate law that provides much of the rationale for shareholder agreements.
A shareholders` pact, also known as the Shareholders` Pact, is an agreement between the shareholders of a company that describes how the company should be operated and defines the rights and obligations of shareholders. The agreement also contains information on the management of the company and the privileges and protection of shareholders.