Shareholder Agreements

HNWShareholder Rights Litigation

I have written many times about the importance of having a written shareholder agreement.  I encourage you to freshen up your understanding about shareholder agreements by reading the link found here:
https://www.hnwlaw.com/business-law/new-jersey-shareholders-rights/a-shareholders-agreement-defines-many-shareholders-rights/

Shareholder agreements generally address twelve specific areas.  They are:

  • restricts the powers or discretion of the board of directors;
  • authorizes the business and affairs of the corporation to be managed, wholly or partly, by one or more of its shareholders or other persons;
  • establishes the individuals who shall serve as directors or officers of the corporation;
  • determines the term of office, manner of selection or removal, or terms or conditions of employment of a director, officer, or other employee of the corporation, regardless of the length of employment;
  • governs the authorization or making of distributions whether in proportion to ownership of shares, subject to Section 21.303;
  • determines the manner in which profits and losses will be apportioned;
  • governs, in general or with regard to specific matters, the exercise or division of voting power by and between the shareholders, directors, or other persons, including use of disproportionate voting rights or director proxies;
  • establishes the terms of an agreement for the transfer or use of property or for the provision of services between the corporation and another person, including a shareholder, director,’ officer, or employee of the corporation;
  • authorizes arbitration or grants authority to a shareholder or other person to resolve any issue about which there is a deadlock among the directors, shareholders, or other persons authorized to manage the corporation;
  • requires winding up and termination of the corporation at the request of one or more shareholders or on the occurrence of a specified event or contingency, in which case the winding up and termination of the corporation will proceed as if all of the shareholders had consented in writing to the winding up and termination as provided by Subchapter K;
  • with regard to one or more social purposes specified in the corporation’s certificate of formation, governs the exercise of corporate powers, the management of the operations and affairs of the corporation, the approval by shareholders or other persons of corporate actions, or the relationship among the shareholders, the directors, and the corporation; or
  • otherwise governs the exercise of corporate powers, the management of the business and affairs of the corporation, or the relationship among the shareholders, the directors, and the corporation as if the corporation were a partnership or in a manner that would otherwise be appropriate only among partners and not contrary to public policy.”

A shareholder agreement is effective among the shareholders and between the corporation and the shareholders.

To discuss your NJ shareholder matter, please contact Fredrick P. Niemann, Esq. toll-free at (855) 376-5291 or email him at fniemann@hnlawfirm.com.  Please ask us about our video conferencing or telephone consultations if you are unable to come to our office.

By Fredrick P. Niemann, Esq. of Hanlon Niemann & Wright, a Freehold Township, Monmouth County, NJ Shareholder Attorney

Previous PostNext Post