Shareholder agreements are contractual agreements between the shareholders of a company. They are used to govern relations between shareholders, as well as to clarify the rights and obligations of each party in the event of specific situations such as the transfer of shares, succession or the distribution of profits. In Switzerland, shareholder agreements are very common, and can be customized to suit the specific needs of each company.
The signing of a shareholders’ agreement is crucial to prevent conflicts between the various shareholders of a company. It is indeed advisable to clarify the situation when several parties are involved in a company, particularly in the case of a public limited company. However, this agreement is not regulated by law. Moreover, relationships vary from company to company. There is therefore no standard contract. Nevertheless, it is advisable to seek the advice of a competent lawyer when drawing up such a contract.
In this text, we will examine certain clauses that can be found in Swiss shareholder agreements.
Emption and pre-emption rights enable a shareholder to buy out another shareholder. The emption right clause stipulates that if a shareholder wishes to sell his or her shares, he or she must first offer them to the company or other shareholders as a priority, before selling them to a third party. The pre-emption clause allows existing shareholders to buy back the shares of a shareholder who wishes to sell them to a third party. Finally, the obligation to purchase obliges a shareholder to sell his or her shares to another shareholder or to the company in specific situations, such as in the event of non-fulfillment of commitments or termination of office.
The buyback right enables a shareholder to buy back his or her shares from a third-party acquirer if certain conditions are met. For example, if a third party acquires a majority stake in the company, minority shareholders can exercise their buy-back right to recover their shares. The buy-back right must be specified in the shareholders’ agreement, together with the conditions and deadlines for exercising it.
The shareholders “agreement may specify the type of voting to be used at general meetings, for example, by head or by shares. Head voting means that each shareholder has one vote, irrespective of the number of shares he or she owns. Share voting, on the other hand, allows shareholders to vote according to the number of shares they own. The choice of voting system will depend on shareholders” preferences and the size of the company.
The non-competition clause prevents shareholders from engaging in activities that compete with those of the company. This clause is designed to protect the interests of the company by preventing shareholders from harming the company by exploiting their knowledge or experience for the benefit of another company.
When a company is sold, it can happen that the buyer wishes to acquire all the shares in the company. This situation generally arises when international groups acquire companies. Obligations de suite, also known as drag-along rights, enable the acquirer to force other shareholders to sell their shares at the same price and under the same conditions.
Exit rights, also known as tag-along rights, enable minority shareholders to sell their shares at the same price and under the same conditions as majority shareholders. This clause protects minority shareholders by offering them a degree of protection in the event of a sale of the company.
The shareholders “agreement may also include specific provisions for the constitution of the general meeting, such as the quorum required for the meeting to be validly constituted, or the deadline for calling shareholders to the meeting. These provisions are designed to ensure that the shareholders” meeting is properly held and that decisions are taken.
The veto clause enables one or more shareholders to oppose certain important decisions, even if the majority of shareholders are in favor of those decisions. The tie-breaking clause can be used to resolve situations where the vote is tied at the Annual General Meeting. This clause specifies how votes are to be broken in the event of a tie.
The shareholders’ agreement can specify the rules for shareholder representation at the AGM, such as the possibility for a shareholder to be represented by a proxy or to vote remotely. This clause is designed to facilitate shareholder participation at the AGM, and to ensure that all shareholders have a voice in important company decisions.
In conclusion, shareholder agreements are essential documents for governing relations between a company’s shareholders. They clarify the rights and obligations of each shareholder, regulate decision-making processes and provide mechanisms for resolving conflicts. Shareholder agreements can contain numerous provisions. It is important to draft them carefully to meet the specific needs of shareholders and to ensure good corporate governance. To help you, we strongly recommend that you consult a lawyer.