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draft a comprehensive shareholders agreement for a kenyan company known as VG Foods incorporated in kenya. initially they were four shareholders and one relinquished their shares to the company. Two of the shareholders have been doing the heavy lifting in the company building it to what it is right now. The third shareholder now wants to bring in someone to be the fourth shareholder but the two shareholders want to protect their sweat and time that they have put in . Kindly draft the shareholders agreement protecting the founders who put in time and a clause on preference shares
Shareholders Agreement for VG Foods
Introduction
This Shareholders Agreement ("Agreement") is made and entered into as of [Date] by and between VG Foods Limited, a company incorporated under the laws of Kenya ("Company"), and the following shareholders:
[Shareholder 1 Name] ("Shareholder 1")
[Shareholder 2 Name] ("Shareholder 2")
[Shareholder 3 Name] ("Shareholder 3")
Table of Contents
Definitions
Purpose
Share Capital and Ownership
Management and Control
Founder Protection
Preference Shares
Transfer of Shares
Dispute Resolution
Amendment
Governing Law and Jurisdiction
Notices
Entire Agreement
Severability
Waiver
Counterparts
1. Definitions
"Company" means VG Foods Limited, a company incorporated under the laws of Kenya.
"Founder" means Shareholder 1 and Shareholder 2.
"Shareholder" means any person who holds shares in the Company.
"Preference Shares" means the shares issued to the Founders as described in Section 6 of this Agreement.
2. Purpose
This Agreement sets forth the terms and conditions governing the ownership, management, and control of the Company, including provisions for the protection of the Founders' contributions and the issuance of preference shares.
3. Share Capital and Ownership
The authorized share capital of the Company is [Amount] divided into [Number] ordinary shares of [Value] each.
The issued share capital of the Company is currently [Amount] divided into [Number] ordinary shares of [Value] each, held as follows:
Shareholder 1: [Number] shares
Shareholder 2: [Number] shares
Shareholder 3: [Number] shares
Shareholder 3 intends to introduce a new shareholder ("New Shareholder") to the Company. The New Shareholder will acquire [Number] shares in the Company.
4. Management and Control
The management and control of the Company shall be vested in the Board of Directors ("Board").
The Board shall consist of [Number] directors, initially appointed as follows:
Shareholder 1: [Number] directors
Shareholder 2: [Number] directors
Shareholder 3: [Number] directors
The Board shall have the power to appoint and remove directors, subject to the provisions of this Agreement and the Companies Act, 2015.
5. Founder Protection
Founder Rights: The Founders shall have the following rights:
Right to Approve Key Decisions: The Founders shall have the right to approve any major decisions affecting the Company, including but not limited to:
Mergers and Acquisitions: Any merger, acquisition, or sale of the Company or its assets.
Financing: Any significant financing round or debt issuance.
Change of Control: Any change in control of the Company.
Right to First Refusal: The Founders shall have the right of first refusal to purchase any shares offered for sale by any other shareholder.
Right to Information: The Founders shall have the right to access all relevant information about the Company's operations and financial performance.
Founder Protection Clause: The Founders shall have the right to terminate this Agreement and dissolve the Company if:
Removal of Founder: A Founder is removed from the Board without their consent.
Material Breach: A Shareholder materially breaches this Agreement.
Dissolution: The Founders agree to dissolve the Company.
6. Preference Shares
Issuance: The Company shall issue [Number] preference shares to the Founders, with the following terms:
Liquidation Preference: The Founders shall be entitled to receive a preferential return of their investment upon liquidation of the Company, before any distribution to the holders of ordinary shares.
Dividend Preference: The Founders shall be entitled to receive a preferential dividend payment before any dividend is paid to the holders of ordinary shares.
Voting Rights: The Founders shall have the right to vote on all matters affecting the Company, including the election of directors.
Purpose: The issuance of preference shares is intended to protect the Founders' investment and ensure their continued involvement in the management and control of the Company.
7. Transfer of Shares
Restrictions: The transfer of shares in the Company shall be subject to the following restrictions:
Right of First Refusal: Any shareholder wishing to transfer their shares must first offer them to the other shareholders at a fair market price.
Board Approval: The transfer of shares must be approved by the Board.
Founder Approval: The transfer of shares by a Founder must be approved by the other Founder.
Purpose: These restrictions are intended to ensure that the Founders retain control of the Company and prevent the dilution of their ownership.
8. Dispute Resolution
Negotiation: Any dispute arising out of or relating to this Agreement shall be settled amicably through negotiation between the parties.
Arbitration: If the parties are unable to reach an amicable settlement, the dispute shall be referred to arbitration in accordance with the Arbitration Act, 1995.
Venue: The arbitration shall be conducted in Nairobi, Kenya.
9. Amendment
Requirement: This Agreement may be amended only by a written agreement signed by all of the shareholders.
10. Governing Law and Jurisdiction
Governing Law: This Agreement shall be governed by and construed in accordance with the laws of Kenya.
Jurisdiction: The courts of Kenya shall have exclusive jurisdiction over any dispute arising out of or relating to this Agreement.
11. Notices
Method: All notices and other communications hereunder shall be in writing and shall be deemed to have been duly given when delivered personally, sent by registered mail, or sent by email.
Address: Notices to the Company shall be sent to its registered office. Notices to the shareholders shall be sent to their respective addresses as set forth in the Company's register of shareholders.
12. Entire Agreement
Complete Agreement: This Agreement constitutes the entire agreement between the parties with respect to the subject matter hereof and supersedes all prior or contemporaneous communications, representations, or agreements, whether oral or written.
13. Severability
Invalidity: If any provision of this Agreement is held to be invalid or unenforceable, such provision shall be struck and the remaining provisions shall remain in full force and effect.
14. Waiver
No Waiver: No waiver of any provision of this Agreement shall be effective unless in writing and signed by the party against whom the waiver is sought.
15. Counterparts
Execution: This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.
Conclusion
This Shareholders Agreement is intended to provide a comprehensive framework for the ownership, management, and control of VG Foods Limited, ensuring the protection of the Founders' contributions and the orderly development of the Company.
Sources:
Companies Act, 2015
Arbitration Act, 1995
Constitution of Kenya, 2010
The Law of Contract, Kenya
The Law of Business Associations, Kenya
Answered by mwakili.com