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

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

1. Definitions

2. Purpose

3. Shareholding Structure

4. Management and Control

5. Founder Protection

6. Preference Shares

7. Transfer of Shares

8. Dispute Resolution

9. Amendment

10. Governing Law and Jurisdiction

11. Entire Agreement

12. Severability

13. Notices

14. 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 with special rights and privileges as defined in this Agreement.

• "Agreement" means this Shareholders Agreement.

2. Purpose

This Agreement sets forth the terms and conditions governing the relationship between the Shareholders of the Company, including the ownership, management, and transfer of shares in the Company.

3. Shareholding Structure

• The Company's authorized share capital is [Amount] divided into [Number] ordinary shares of [Value] each.

• Shareholder 1 holds [Number] ordinary shares representing [Percentage] of the issued share capital.

• Shareholder 2 holds [Number] ordinary shares representing [Percentage] of the issued share capital.

• Shareholder 3 holds [Number] ordinary shares representing [Percentage] of the issued share capital.

4. Management and Control

• The Company shall be managed by a Board of Directors ("Board") consisting of [Number] directors.

• The Founders shall have the right to appoint [Number] directors to the Board.

• Shareholder 3 shall have the right to appoint [Number] directors to the Board.

• The Board shall have the power to manage the Company's business and affairs.

5. Founder Protection

• Voting Rights: The Founders shall have the right to vote together as a single unit on all matters relating to the Company, including the election of directors, the amendment of the Company's Articles of Association, and the sale or disposal of the Company's assets.

• Right of First Refusal: In the event that any Shareholder desires to sell or transfer their shares in the Company, the Founders shall have the right of first refusal to purchase such shares at a fair market value determined by an independent valuation expert.

• Anti-Dilution Protection: The Founders shall be entitled to receive additional shares in the Company to maintain their proportionate ownership interest in the event of any future issuance of shares by the Company.

• Compensation for Services: The Founders shall be entitled to receive reasonable compensation for their services to the Company, as determined by the Board.

6. Preference Shares

• The Founders shall be entitled to receive [Number] preference shares in the Company.

• The Preference Shares shall have the following rights and privileges:

  • Dividend Preference: The Preference Shares shall be entitled to receive a preferential dividend of [Percentage] per annum before any dividend is paid on the ordinary shares.

  • Liquidation Preference: In the event of the liquidation or winding up of the Company, the holders of the Preference Shares shall be entitled to receive the par value of their shares plus any accrued and unpaid dividends before any distribution is made to the holders of the ordinary shares.

  • Redemption Right: The Founders shall have the right to redeem their Preference Shares at a price of [Amount] per share at any time after [Date].

7. Transfer of Shares

• No Shareholder shall transfer or dispose of their shares in the Company without the prior written consent of the other Shareholders.

• The Founders shall have the right to approve or reject any proposed transfer of shares by Shareholder 3.

• Any transfer of shares shall be subject to the terms and conditions of this Agreement.

8. Dispute Resolution

• Any dispute arising out of or relating to this Agreement shall be settled amicably by the Shareholders.

• If the Shareholders are unable to reach an amicable settlement, the dispute shall be referred to arbitration in accordance with the Arbitration Act, 1995.

9. Amendment

• This Agreement may be amended only by a written agreement signed by all of the Shareholders.

10. Governing Law and Jurisdiction

• This Agreement shall be governed by and construed in accordance with the laws of Kenya.

• The courts of Kenya shall have exclusive jurisdiction over any dispute arising out of or relating to this Agreement.

11. Entire Agreement

• This Agreement constitutes the entire agreement between the Shareholders with respect to the subject matter hereof and supersedes all prior or contemporaneous communications, representations, or agreements, whether oral or written.

12. Severability

• 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.

13. Notices

• All notices and other communications hereunder shall be in writing and shall be deemed to have been duly given when delivered personally, sent by certified mail, return receipt requested, or sent by overnight courier service, addressed as follows:

• If to the Company:

  • [Company Address]

• If to Shareholder 1:

  • [Shareholder 1 Address]

• If to Shareholder 2:

  • [Shareholder 2 Address]

• If to Shareholder 3:

  • [Shareholder 3 Address]

14. Counterparts

• 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.

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above.

[Signature of Company]

[Signature of Shareholder 1]

[Signature of Shareholder 2]

[Signature of Shareholder 3]

Sources:

• The Companies Act, 2015

• The Arbitration Act, 1995

• The Constitution of Kenya, 2010

Conclusion

This Shareholders Agreement provides a comprehensive framework for the governance of VG Foods Limited, ensuring the protection of the Founders' interests and establishing a clear structure for the management and control of the Company. It is essential for the Shareholders to carefully review and understand the terms of this Agreement before signing it.