Can we use a standardized shareholders agreement?https://jhwbizlaw.com/wp-content/themes/movedo/images/empty/thumbnail.jpg150150Jiang Hong Wilkin Business LawJiang Hong Wilkin Business Law//jhwbizlaw.com/wp-content/uploads/2020/07/jhw-logo.png
Some clients request the template shareholders’ agreement and want to simply change the name and date of the shareholders’ agreement. This should never be done. Each company has its own situation. A shareholders’ agreement is prepared and customized for each company. One agreement good for one company may not apply to another company. For example, if the operation of a company depends on the CEO significantly, its shareholders’ agreement therefore requires the company buy life insurance for the CEO. Does another company also need to buy life insurance for its CEO? Another example, a shareholder’s agreement requires that a fundamental transaction be approved by more than 70% of voting shares. Does this 70% apply to another company? What if the minority shareholder hold 20% of shares of the company? If still using 70% in the shareholders’ agreement, there will be no protection for the minority shareholder. Generally speaking, the shareholders’ agreement will govern the shareholders for many years and the shareholders should be very careful with each term and make sure they understand all the terms and conditions of the shareholders’ agreement.