Ask a lawyer:
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
Table of Contents
Introduction
Definitions
Share Capital and Shareholding
Initial Shareholding
Transfer of Shares
Issuance of New Shares
Rights and Obligations of Shareholders
Voting Rights
Pre-emptive Rights
Right of First Refusal
Management and Operations
Board of Directors
Decision Making
Protection of Founders
Sweat Equity
Preference Shares
Dispute Resolution
Termination
Miscellaneous Provisions
Shareholders Agreement
This Shareholders Agreement ("Agreement") is made and entered into as of [Date], by and among the following parties:
[Shareholder 1 Name], of [Address]
[Shareholder 2 Name], of [Address]
[Shareholder 3 Name], of [Address]
VG Foods Limited, a company incorporated in Kenya with its registered office at [Company Address] ("Company")
WHEREAS:
The Company was initially incorporated with four shareholders.
One of the initial shareholders has relinquished their shares to the Company.
Two of the remaining shareholders have significantly contributed to the growth and success of the Company.
The third shareholder intends to introduce a new shareholder to the Company.
The parties wish to enter into this Agreement to regulate their relationship as shareholders and to protect the interests of the founding shareholders.
NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein, the parties hereby agree as follows:
1. Introduction
This Agreement sets forth the terms and conditions governing the relationship among the shareholders of VG Foods Limited, including the management of the Company, the transfer of shares, and the protection of the interests of the founding shareholders.
2. Definitions
"Company" means VG Foods Limited.
"Shares" means the ordinary shares and preference shares of the Company.
"Shareholders" means the parties to this Agreement who hold shares in the Company.
"Board" means the Board of Directors of the Company.
3. Share Capital and Shareholding
3.1 Initial Shareholding
The initial shareholding of the Company is as follows:
[Shareholder 1 Name]: [Number of Shares] shares
[Shareholder 2 Name]: [Number of Shares] shares
[Shareholder 3 Name]: [Number of Shares] shares
3.2 Transfer of Shares
Any transfer of shares by a shareholder must be approved by the Board.
The transferring shareholder must first offer the shares to the existing shareholders on a pro-rata basis.
If the existing shareholders do not purchase the shares, the transferring shareholder may offer the shares to a third party, subject to the approval of the Board.
3.3 Issuance of New Shares
The Company may issue new shares with the approval of the Board.
Existing shareholders shall have pre-emptive rights to purchase new shares in proportion to their existing shareholding.
4. Rights and Obligations of Shareholders
4.1 Voting Rights
Each ordinary share entitles the holder to one vote at general meetings of the Company.
Preference shares shall have voting rights only on matters affecting their rights and privileges.
4.2 Pre-emptive Rights
Existing shareholders shall have the right to purchase any new shares issued by the Company before they are offered to third parties.
4.3 Right of First Refusal
If a shareholder wishes to sell their shares, they must first offer the shares to the existing shareholders on a pro-rata basis.
If the existing shareholders do not purchase the shares, the selling shareholder may offer the shares to a third party, subject to the approval of the Board.
5. Management and Operations
5.1 Board of Directors
The Board shall consist of [Number] directors.
Each shareholder holding at least [Percentage]% of the shares shall have the right to appoint one director.
5.2 Decision Making
Decisions of the Board shall be made by a majority vote.
Certain decisions, including the issuance of new shares and the transfer of shares, shall require the approval of at least [Percentage]% of the directors.
6. Protection of Founders
6.1 Sweat Equity
The Company acknowledges the significant contributions of [Shareholder 1 Name] and [Shareholder 2 Name] to the growth and success of the Company.
The Company shall issue [Number] preference shares to [Shareholder 1 Name] and [Shareholder 2 Name] as recognition of their contributions.
6.2 Preference Shares
Preference shares shall have the following rights and privileges:
Priority in the payment of dividends.
Priority in the distribution of assets upon liquidation of the Company.
Voting rights on matters affecting their rights and privileges.
7. Dispute Resolution
Any disputes arising out of or in connection with this Agreement shall be resolved through mediation.
If mediation fails, the dispute shall be referred to arbitration in accordance with the Arbitration Act of Kenya.
8. Termination
This Agreement shall terminate upon the occurrence of any of the following events:
The dissolution of the Company.
The mutual agreement of all shareholders.
The acquisition of all shares by a single shareholder.
9. Miscellaneous Provisions
Amendments: This Agreement may be amended only by a written agreement signed by all shareholders.
Governing Law: This Agreement shall be governed by and construed in accordance with the laws of Kenya.
Entire Agreement: This Agreement constitutes the entire agreement among the parties and supersedes all prior agreements and understandings.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written.
[Shareholder 1 Name]
Signature: _______________________
Date: ____________________________
[Shareholder 2 Name]
Signature: _______________________
Date: ____________________________
[Shareholder 3 Name]
Signature: _______________________
Date: ____________________________
VG Foods Limited
By: _____________________________
Name: ___________________________
Title: ____________________________
Date: ____________________________
Sources
This Shareholders Agreement is a comprehensive document designed to protect the interests of the founding shareholders of VG Foods Limited while ensuring the smooth operation and management of the Company. It includes provisions for the transfer and issuance of shares, the rights and obligations of shareholders, and the protection of the founders' contributions through the issuance of preference shares.
Answered by mwakili.com