It is available to supplement the company`s statutes. Some binding provisions must be included in the agreement, but the rest is that the company`s shareholders decide on the basis of their personal and sectoral objectives. Non-compete clauses are often included in shareholder contracts. By specifying when and how a shareholder may engage in competing activities during and after having been a shareholder of the company, it removes any ambiguity that may result from the absence of explicit restrictions. The reason for controlling the external efforts of shareholders is that the best knowledge of the intellectual property or the management system of the company, which are essential to maintain the company`s lead, must remain confidential, regardless of the arrival and the course of the shareholders. In the shareholders` pact, the backs and don`ts, including the extent and duration of these restrictions, should be noisy and clear. It is imperative that the shareholders` pact includes a non-compete clause or that there is no point in crying over the milk spilled when a shareholder exploits the loophole and reveals the company`s business secrets. Note, however, that non-competition clauses must be appropriate to ensure their applicability. If they are excessively restrictive or overly broad, the Tribunal may decide that such a clause does not affect the shareholder. Where a shareholder has not fully or partially subscribed to his share in cash within the allotted time, the remaining shares may be acquired by the other shareholders. When a cash call results in the acquisition of new shares by a shareholder, either directly or via a loan convertible into shares, it ultimately results from the dilution of the shares of shareholders who did not participate in the cash auction. When a company issues new shares to the public for subscription, this issue is seen as a means of diluting the value of the shares of the original shareholders. A price-based anti-dilution agreement protects investors from the future issuance of shares at a lower price than initial investors have paid.
When capital is raised, the new shareholder brings in, or when a current shareholder transfers shares to any number of funds (including family members) to third parties, those shareholders must be linked to the SHA. To do so, a SHA should clearly state that any new shareholder or acquirer must be a part of the SHA before receiving the shares. This can be achieved by requiring the purchaser or subsequent purchaser of shares/investor to sign a document in the form of a document by which they agree to be bound by all SHA conditions. Such a document is an “instrument of membership” or an “instrument of fidelity.” Shareholders often have access to trade secrets, standard operating procedures, client and source lists, research and development, financial details and other sensitive or confidential information. A SHA may contain non-disclosure and non-competition clauses, compel shareholders to keep the secret and prevent them from working for competitors or other parties for whom the interests of the company could be harmed.