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
Shareholding Structure
Management and Control
Transfer of Shares
Pre-emptive Rights
Preference Shares
Dispute Resolution
Confidentiality
Entire Agreement
Governing Law and Jurisdiction
Notices
Amendment
Severability
Binding Effect
Waiver
Counterparts
Governing Law and Jurisdiction
1. Introduction
This Shareholders Agreement (the "Agreement") is made and entered into as of this [Date] by and between:
VG Foods Limited, a company incorporated under the laws of Kenya, with its registered office at [Address] (the "Company");
[Shareholder 1 Name], residing at [Address] (the "Shareholder 1");
[Shareholder 2 Name], residing at [Address] (the "Shareholder 2");
[Shareholder 3 Name], residing at [Address] (the "Shareholder 3").
The parties are hereinafter collectively referred to as the "Parties" and individually as a "Party".
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.
2. Definitions
For the purposes of this Agreement, the following terms shall have the meanings ascribed to them below:
"Agreement" means this Shareholders Agreement, as amended from time to time.
"Board" means the Board of Directors of the Company.
"Company" means VG Foods Limited, a company incorporated under the laws of Kenya.
"Founder" means Shareholder 1 and Shareholder 2.
"Shares" means the shares in the capital of the Company.
"Shareholder" means any person who holds Shares in the Company.
"Shareholder 1" means [Shareholder 1 Name].
"Shareholder 2" means [Shareholder 2 Name].
"Shareholder 3" means [Shareholder 3 Name].
"Written" means in writing and signed by the Parties.
3. Shareholding Structure
3.1. The initial shareholding structure of the Company was as follows:
Shareholder 1: [Percentage]% of the Shares
Shareholder 2: [Percentage]% of the Shares
Shareholder 3: [Percentage]% of the Shares
[Former Shareholder Name]: [Percentage]% of the Shares
3.2. [Former Shareholder Name] relinquished their Shares to the Company.
3.3. The current shareholding structure of the Company is as follows:
Shareholder 1: [Percentage]% of the Shares
Shareholder 2: [Percentage]% of the Shares
Shareholder 3: [Percentage]% of the Shares
3.4. Shareholder 3 proposes to introduce a new Shareholder (the "New Shareholder") to the Company. The Parties agree that the New Shareholder will acquire [Percentage]% of the Shares.
3.5. The shareholding structure of the Company after the New Shareholder's acquisition will be as follows:
Shareholder 1: [Percentage]% of the Shares
Shareholder 2: [Percentage]% of the Shares
Shareholder 3: [Percentage]% of the Shares
New Shareholder: [Percentage]% of the Shares
4. Management and Control
4.1. The Founders shall have the right to appoint a majority of the directors of the Company.
4.2. The Founders shall have the right to veto any decision of the Board that would materially affect the business of the Company, including but not limited to:
The issuance of new Shares;
The sale or disposal of any significant asset of the Company;
The incurrence of any significant debt by the Company;
The appointment or removal of any director or officer of the Company.
4.3. The Founders shall have the right to approve any agreement entered into by the Company that would materially affect the business of the Company.
4.4. The Founders shall have the right to receive confidential information about the business of the Company.
4.5. The Founders shall have the right to participate in the management of the Company.
4.6. The Founders shall have the right to be consulted on all major decisions affecting the Company.
4.7. The Founders shall have the right to be kept informed of the financial performance of the Company.
4.8. The Founders shall have the right to inspect the books and records of the Company.
5. Transfer of Shares
5.1. No Shareholder shall transfer any Shares without the prior written consent of the Founders.
5.2. The Founders shall have the right to purchase any Shares that a Shareholder proposes to transfer to a third party, at a price equal to the fair market value of the Shares, as determined by an independent valuation expert mutually agreed upon by the Parties.
5.3. If the Founders do not exercise their right to purchase the Shares, the Shareholder may transfer the Shares to a third party, subject to the approval of the Founders.
5.4. The Founders shall have the right to approve any agreement entered into by the Company that would materially affect the business of the Company.
6. Pre-emptive Rights
6.1. The Founders shall have the right to purchase any new Shares issued by the Company, in proportion to their existing shareholdings, before such Shares are offered to any other person.
6.2. The Founders shall have the right to purchase any Shares that are transferred by a Shareholder to a third party, in proportion to their existing shareholdings, before such Shares are transferred to the third party.
6.3. The Founders shall have the right to approve any agreement entered into by the Company that would materially affect the business of the Company.
7. Preference Shares
7.1. The Company may issue preference Shares to the Founders, subject to the approval of the Founders.
7.2. The preference Shares shall have the following rights and privileges:
A preferential right to receive dividends, before any dividends are paid to the holders of ordinary Shares;
A preferential right to receive repayment of capital, in the event of the liquidation of the Company, before any repayment of capital is made to the holders of ordinary Shares;
The right to vote on certain matters, as determined by the Board.
7.3. The Founders shall have the right to approve any agreement entered into by the Company that would materially affect the business of the Company.
8. Dispute Resolution
8.1. Any dispute arising out of or relating to this Agreement shall be settled amicably by the Parties through negotiation.
8.2. If the Parties are unable to reach an amicable settlement within [Number] days of the dispute arising, the dispute shall be referred to arbitration in accordance with the Arbitration Act, 1995.
8.3. The arbitration shall be conducted in [Location] by a single arbitrator appointed by the parties.
8.4. The arbitration shall be conducted in English.
8.5. The decision of the arbitrator shall be final and binding on the Parties.
9. Confidentiality
9.1. Each Party agrees to hold confidential all information relating to the business of the Company, including but not limited to financial information, customer lists, trade secrets, and marketing plans.
9.2. Each Party agrees not to disclose any confidential information to any third party without the prior written consent of the other Parties.
9.3. Each Party agrees to take all reasonable steps to protect the confidentiality of the confidential information.
10. Entire 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.
11. Governing Law and Jurisdiction
This Agreement shall be governed by and construed in accordance with the laws of Kenya.
12. 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:
VG Foods Limited [Address]
If to Shareholder 1:
[Shareholder 1 Name] [Address]
If to Shareholder 2:
[Shareholder 2 Name] [Address]
If to Shareholder 3:
[Shareholder 3 Name] [Address]
or to such other address as any Party may designate in writing from time to time.
13. Amendment
This Agreement may be amended only by a written instrument signed by all of the Parties.
14. 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.
15. Binding Effect
This Agreement shall be binding upon and inure to the benefit of the Parties hereto and their respective successors and permitted assigns.
16. 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 to be enforced.
17. 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.
18. Governing Law and Jurisdiction
This Agreement shall be governed by and construed in accordance with the laws of Kenya.
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date first written above.
VG Foods Limited
By: [Name]
Title: [Title]
Shareholder 1
[Signature]
Shareholder 2
[Signature]
Shareholder 3
[Signature]
Case Laws
Relevant Case Laws:
Re: The Companies Act, 2015 (Source: http://www.kenyalaw.org:8181/exist/rest//db/kenyalex/Kenya/Legislation/English/Acts%20and%20Regulations/C/Companies%20Act%20-%20No.%2017%20of%202015/docs/CompaniesAct17of2015.pdf ↗)
This case law provides the legal framework for the formation, operation, and regulation of companies in Kenya. It outlines the rights and obligations of shareholders, directors, and the company itself. The Agreement draws upon the provisions of the Companies Act, 2015, to ensure compliance with Kenyan law.
Re: The Arbitration Act, 1995 (Source: http://www.kenyalaw.org:8181/exist/kenyalex/actview.xql?actid=CAP.%204 ↗)
This case law provides the legal framework for arbitration in Kenya. The Agreement incorporates the provisions of the Arbitration Act, 1995, to ensure that any disputes arising from the Agreement are resolved fairly and efficiently.
Re: The Law of Contract Act (Source: http://www.kenyalaw.org:8181/exist/rest//db/kenyalex/Kenya/Legislation/English/Acts%20and%20Regulations/L/Law%20of%20Contract%20Act%20Cap.%2023%20-%20No.%2043%20of%201960/docs/LawofContractAct43of1960.pdf ↗)
This case law provides the legal framework for contracts in Kenya. The Agreement is a legally binding contract between the Parties, and it is subject to the provisions of the Law of Contract Act.
Sources
Document
Shareholders Agreement for VG Foods Limited
This Shareholders Agreement (the "Agreement") is made and entered into as of this [Date] by and between:
VG Foods Limited, a company incorporated under the laws of Kenya, with its registered office at [Address] (the "Company");
[Shareholder 1 Name], residing at [Address] (the "Shareholder 1");
[Shareholder 2 Name], residing at [Address] (the "Shareholder 2");
[Shareholder 3 Name], residing at [Address] (the "Shareholder 3").
The parties are hereinafter collectively referred to as the "Parties" and individually as a "Party".
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.
1. Definitions
For the purposes of this Agreement, the following terms shall have the meanings ascribed to them below:
"Agreement" means this Shareholders Agreement, as amended from time to time.
"Board" means the Board of Directors of the Company.
"Company" means VG Foods Limited, a company incorporated under the laws of Kenya.
"Founder" means Shareholder 1 and Shareholder 2.
"Shares" means the shares in the capital of the Company.
"Shareholder" means any person who holds Shares in the Company.
"Shareholder 1" means [Shareholder 1 Name].
"Shareholder 2" means [Shareholder 2 Name].
"Shareholder 3" means [Shareholder 3 Name].
"Written" means in writing and signed by the Parties.
2. Shareholding Structure
2.1. The initial shareholding structure of the Company was as follows:
Shareholder 1: [Percentage]% of the Shares
Shareholder 2: [Percentage]% of the Shares
Shareholder 3: [Percentage]% of the Shares
[Former Shareholder Name]: [Percentage]% of the Shares
2.2. [Former Shareholder Name] relinquished their Shares to the Company.
2.3. The current shareholding structure of the Company is as follows:
Shareholder 1: [Percentage]% of the Shares
Shareholder 2: [Percentage]% of the Shares
Shareholder 3: [Percentage]% of the Shares
2.4. Shareholder 3 proposes to introduce a new Shareholder (the "New Shareholder") to the Company. The Parties agree that the New Shareholder will acquire [Percentage]% of the Shares.
2.5. The shareholding structure of the Company after the New Shareholder's acquisition will be as follows:
Shareholder 1: [Percentage]% of the Shares
Shareholder 2: [Percentage]% of the Shares
Shareholder 3: [Percentage]% of the Shares
New Shareholder: [Percentage]% of the Shares
3. Management and Control
3.1. The Founders shall have the right to appoint a majority of the directors of the Company.
3.2. The Founders shall have the right to veto any decision of the Board that would materially affect the business of the Company, including but not limited to:
The issuance of new Shares;
The sale or disposal of any significant asset of the Company;
The incurrence of any significant debt by the Company;
The appointment or removal of any director or officer of the Company.
3.3. The Founders shall have the right to approve any agreement entered into by the Company that would materially affect the business of the Company.
3.4. The Founders shall have the right to receive confidential information about the business of the Company.
3.5. The Founders shall have the right to participate in the management of the Company.
3.6. The Founders shall have the right to be consulted on all major decisions affecting the Company.
3.7. The Founders shall have the right to be kept informed of the financial performance of the Company.
3.8. The Founders shall have the right to inspect the books and records of the Company.
4. Transfer of Shares
4.1. No Shareholder shall transfer any Shares without the prior written consent of the Founders.
4.2. The Founders shall have the right to purchase any Shares that a Shareholder proposes to transfer to a third party, at a price equal to the fair market value of the Shares, as determined by an independent valuation expert mutually agreed upon by the Parties.
4.3. If the Founders do not exercise their right to purchase the Shares, the Shareholder may transfer the Shares to a third party, subject to the approval of the Founders.
4.4. The Founders shall have the right to approve any agreement entered into by the Company that would materially affect the business of the Company.
5. Pre-emptive Rights
5.1. The Founders shall have the right to purchase any new Shares issued by the Company, in proportion to their existing shareholdings, before such Shares are offered to any other person.
5.2. The Founders shall have the right to purchase any Shares that are transferred by a Shareholder to a third party, in proportion to their existing shareholdings, before such Shares are transferred to the third party.
5.3. The Founders shall have the right to approve any agreement entered into by the Company that would materially affect the business of the Company.
6. Preference Shares
6.1. The Company may issue preference Shares to the Founders, subject to the approval of the Founders.
6.2. The preference Shares shall have the following rights and privileges:
A preferential right to receive dividends, before any dividends are paid to the holders of ordinary Shares;
A preferential right to receive repayment of capital, in the event of the liquidation of the Company, before any repayment of capital is made to the holders of ordinary Shares;
The right to vote on certain matters, as determined by the Board.
6.3. The Founders shall have the right to approve any agreement entered into by the Company that would materially affect the business of the Company.
7. Dispute Resolution
7.1. Any dispute arising out of or relating to this Agreement shall be settled amicably by the Parties through negotiation.
7.2. If the Parties are unable to reach an amicable settlement within [Number] days of the dispute arising, the dispute shall be referred to arbitration in accordance with the Arbitration Act, 1995.
7.3. The arbitration shall be conducted in [Location] by a single arbitrator appointed by the parties.
7.4. The arbitration shall be conducted in English.
7.5. The decision of the arbitrator shall be final and binding on the Parties.
8. Confidentiality
8.1. Each Party agrees to hold confidential all information relating to the business of the Company, including but not limited to financial information, customer lists, trade secrets, and marketing plans.
8.2. Each Party agrees not to disclose any confidential information to any third party without the prior written consent of the other Parties.
8.3. Each Party agrees to take all reasonable steps to protect the confidentiality of the confidential information.
9. Entire 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.
10. Governing Law and Jurisdiction
This Agreement shall be governed by and construed in accordance with the laws of Kenya.
11. 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:
VG Foods Limited [Address]
If to Shareholder 1:
[Shareholder 1 Name] [Address]
If to Shareholder 2:
[Shareholder 2 Name] [Address]
If to Shareholder 3:
[Shareholder 3 Name] [Address]
or to such other address as any Party may designate in writing from time to time.
12. Amendment
This Agreement may be amended only by a written instrument signed by all of the Parties.
13. 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.
14. Binding Effect
This Agreement shall be binding upon and inure to the benefit of the Parties hereto and their respective successors and permitted assigns.
15. 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 to be enforced.
16. 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.
17. Governing Law and Jurisdiction
This Agreement shall be governed by and construed in accordance with the laws of Kenya.
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date first written above.
VG Foods Limited
By: [Name]
Title: [Title]
Shareholder 1
[Signature]
Shareholder 2
[Signature]
Shareholder 3
[Signature]
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