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Shareholder Agreement for a Family-Owned Business
This Shareholder Agreement (the "Agreement") is made and entered into as of [Date] by and between [Name of Company], a company incorporated under the laws of Kenya (the "Company"), and the following shareholders (each a "Shareholder" and collectively, the "Shareholders"):
[Name of Shareholder 1]
[Name of Shareholder 2]
[Name of Shareholder 3]
Table of Contents
Introduction
Definitions
Share Ownership and Transfer
Management and Control
Dividends and Distributions
Meetings and Voting
Dispute Resolution
Amendment and Termination
Miscellaneous
1. Introduction
This Agreement sets forth the terms and conditions governing the ownership, management, and operation of the Company by the Shareholders. The Shareholders recognize that the Company is a family-owned business and that the success of the Company is dependent upon the harmonious relationship between the Shareholders. This Agreement is intended to provide a framework for the Shareholders to work together effectively and to ensure the long-term success of the Company.
2. Definitions
"Company" means [Name of Company], a company incorporated under the laws of Kenya.
"Shareholder" means each person who is a shareholder of the Company as defined in this Agreement.
"Shares" means the shares of the Company held by the Shareholders.
"Agreement" means this Shareholder Agreement.
"Board" means the Board of Directors of the Company.
"Management" means the management team of the Company.
3. Share Ownership and Transfer
Initial Share Ownership: The initial share ownership of the Company is as follows:
[Name of Shareholder 1] - [Number] Shares
[Name of Shareholder 2] - [Number] Shares
[Name of Shareholder 3] - [Number] Shares
Transfer of Shares: Shares may only be transferred to other Shareholders or to a third party with the written consent of all Shareholders.
Restrictions on Transfer: The transfer of Shares is subject to the following restrictions:
Right of First Refusal: If a Shareholder desires to sell or transfer their Shares, they must first offer the Shares to the other Shareholders at a fair market price.
Buy-Sell Agreement: The Shareholders may enter into a buy-sell agreement to govern the transfer of Shares in the event of death, disability, or other specified events.
Share Certificates: The Company shall issue share certificates to the Shareholders evidencing their ownership of Shares.
4. Management and Control
Board of Directors: The Board shall consist of [Number] directors, who shall be elected by the Shareholders.
Management Team: The Management shall be responsible for the day-to-day operations of the Company.
Decision-Making: Major decisions affecting the Company, such as the issuance of new shares, the sale of assets, or the incurrence of significant debt, shall require the approval of a majority of the Board.
Compensation: The compensation of the directors and management shall be determined by the Board.
5. Dividends and Distributions
Dividend Policy: The Company shall distribute dividends to the Shareholders in accordance with a dividend policy approved by the Board.
Distribution of Profits: The Company shall distribute its profits to the Shareholders in proportion to their share ownership.
Retained Earnings: The Company may retain a portion of its profits for future investment or other purposes.
6. Meetings and Voting
Annual Meetings: The Shareholders shall hold an annual meeting each year to elect directors, approve the financial statements, and conduct other business.
Special Meetings: Special meetings of the Shareholders may be called by the Board or by a majority of the Shareholders.
Voting Rights: Each Shareholder shall have one vote for each Share held.
Quorum: A quorum for a Shareholders' meeting shall be a majority of the outstanding Shares.
7. Dispute Resolution
Negotiation: The Shareholders shall attempt to resolve any disputes arising under this Agreement through good faith negotiation.
Mediation: If negotiation fails, the Shareholders shall submit the dispute to mediation by a mutually agreed upon mediator.
Arbitration: If mediation fails, the Shareholders shall submit the dispute to binding arbitration in accordance with the Arbitration Act, 1995.
8. Amendment and Termination
Amendment: This Agreement may be amended only by a written agreement signed by all Shareholders.
Termination: This Agreement may be terminated by a majority vote of the Shareholders.
9. Miscellaneous
Governing Law: This Agreement shall be governed by and construed in accordance with the laws of Kenya.
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.
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.
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.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above.
[Name of Shareholder 1]
[Name of Shareholder 2]
[Name of Shareholder 3]
[Name of Company]
By:
[Name of Authorized Representative]
Title:
Sources:
The Companies Act, 2015
The Arbitration Act, 1995
The Constitution of Kenya, 2010
Conclusion:
This Shareholder Agreement provides a comprehensive framework for the governance of a family-owned business in Kenya. It addresses key issues such as share ownership, management, decision-making, dispute resolution, and termination. By carefully considering the specific needs and circumstances of the family business, the Shareholders can tailor this Agreement to ensure the long-term success of the Company.
Answered by mwakili.com