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Shareholders Agreement Kenya Pdf

There are quarrels and the possibility of conflicting views will always be relevant. If shareholders can`t agree on the management of the company, a deadlock plan solves it. The agreement should clearly define how disputes can be resolved and what action should be taken. If there are more than two shareholders, depending on the allocation of decisions between the board of directors and shareholders and the number of directors or shareholders, it may nevertheless be interesting to think about where there may be an impasse and how it should be resolved. The simplest approach is to leave the decision to the board of directors. Serious blockages could also lead to the termination of the joint venture. Think about the issues that are so important to the company and your client`s reasons for working in the company that, in the absence of agreement on the subject, they want to detach themselves from their activities. Investors can postpone discussion of a shareholder pact in order to stick to the important role of creating the company. Although they may intend to return later, when there is more time, the opportunity cannot arise and something else is always a priority. Even if they resume it later, shareholder expectations and feelings about the transaction may have diverged by then, making it more difficult for them to accept the terms to be included in the shareholders` pact. They may also consider including provisions regulating the acquisition of capital to avoid dilution of existing shareholders. This is especially relevant if you were a major investor.

PandaTip: This model of shareholder agreements defines the conditions for shareholder interaction and what happens when one or more of them want to leave the company or something happens that forces the exit of a shareholder or the closure of the company. PandaTip: The distribution or resale of shares outside may be accompanied by a large number of legal provisions that this agreement does not seek to address, which is why this clause is important. 1.1 The shareholders are all shareholders of the company, a company [STATE OF INCORPORATION] and are the sole directors and senior executives of the company. The shareholders` pact should detail how a shareholder can sell his shares (how he withdraws). This should be clear in terms of process, communications, timelines, evaluation and methodology. The evaluation of actions is extremely important and needs to be carefully considered. A carefully considered shareholder pact will protect not only the majority interests, but also those of the minority. The aim is to prepare an agreement that fosters trust and creates a common value. The inclusion of conditions that require, for example, the unanimous agreement of shareholders (or the agreement of a given minority shareholder) for certain corporate decisions is quite usual. PandaTip: Change based on the number of shareholders; Sometimes there are only two.

PandaTip: This can be a common topic for shareholder disputes, everyone thinks the other doesn`t work hard enough, always overpaid, etc. The use of detailed employment contracts or the placement of these conditions here can help defuse future disputes. Difficulties can arise when the shareholders` pact involves an overly complex decision-making structure, a very long list of issues requiring special agreement from the board of directors or shareholders, or when it sets dollar thresholds acceptable at the beginning of the activity, but which become too low to be passable over time. You need to understand in advance what your client wants to get out of the audacity in which he or she is going, as this will influence other decisions such as ownership structure, decision-making and exit strategy. It`s important to understand how the new business fits into your customer`s overall strategy.

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