Shareholder Agreement
Definition
Shareholder Agreement: A shareholder agreement governs relationships between company shareholders—covering voting rights, transfer restrictions, drag-along/tag-along rights, and protective provisions. It supplements the company's bylaws with more detailed terms agreed upon by shareholders, especially important when multiple parties hold equity.
Example Usage
“Our shareholder agreement includes right of first refusal on share transfers and drag-along rights for a majority-approved acquisition.”
Common Misconceptions
Related Terms
Cap Table
A capitalization table (cap table) is a spreadsheet or database showing the equity ownership of a company, including shares held by founders, employee...
Bylaws
Bylaws are the internal rules governing how a corporation operates—including board structure, officer roles, meeting procedures, voting requirements,...
Voting Rights
Voting rights give shareholders the ability to vote on corporate matters like electing directors, approving major transactions, and amending bylaws. T...
Drag-Along Rights
Drag-along rights allow majority shareholders to force minority shareholders to join in the sale of a company on the same terms. This ensures that a b...
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