Validity Of Shareholder Agreement


[2] The last three judgments deal directly with the legality of type 2 SHA. Rangaraj is relevant to the extent that its legal position that a SHA provision contrary to the AoA or the law is not binding on shareholders or the company is useful for discussing the legality of the type 2 sha. The Court`s judgment, after the Court of Justice in Rome rejected the objection to the nullity of the Treaty under Article 1497 of the Italian Civil Code, addressed the question of the classification and validity of the agreement described above. There are three types of disputes. The first and most frequent, which accounts for 50%, is that the agreement conflicts with articles on the same topic. The second, which accounts for 37%, is that some topics are dealt with in the agreement, but not in the articles. The question is whether the provisions of the agreement can be applied in addition to the articles where the company is already incorporated and whether the articles have entered into force. In practice, the validity of the agreement is analysed on a case-by-case basis. The third type is that the articles have provided for specific issues that the agreement does not have. This type is relatively insignificant and accounts for only 13% of cases. The Court decided that such agreements must be regarded as a “shareholders` agreement”.

Indeed, defining an agreement as a “shareholders` agreement” is not essential that all the participants in the agreement be shareholders when the agreement concerns the exercise of the rights and powers of the shareholders. A shareholders` agreement (sometimes called a shareholders` agreement in the United States) (SHA) is an agreement between the shareholders or members of a company. In practice, it is analogous to a partnership contract. It can be said that some jurisdictions do not correctly define the concept of shareholders` agreement, but the particular consequences of these agreements have been defined so far. Shareholder consent has advantages; To be precise, it helps the business unit to preserve the absence of advertising and to preserve confidentiality. There are, however, a few drawbacks that should be taken into consideration, such as for example. B the limited effect on third parties (in particular assignees and purchasers of units) and the change of defined items may take time. With regard to the scope of the Companies Act, the articles are binding on the company, shareholders, directors, supervisors and senior managers, but the agreement is a voluntary contract between and between shareholders and follows the principle of privity, which means that it is effective only between the signatory parties.

In the Rangaraj case, it was a private company. Sha Type 1 parties have limited the portability of their shares by including a ROFR clause. This clause has not been included in the company`s AoA. Subsequently, the question of the validity of such an agreement arose. In this case, the Court stressed the importance of a company`s AoA and Memorandum of Association (MoA). He went on to point out that, in accordance with the combined interpretation of sections 3(iii) and 82 of the Companies Act 1956, restrictions on portability can only exist in the case of a private enterprise if this is stipulated in the company`s AoA. . .

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