1.1 This shareholders` agreement intends to regulate the reciprocal rights and obligations of the parties as shareholders of the company, including the individual contributions and responsibilities of the parties. In strict legal theory, the relationship between shareholders and those between shareholders and the company is governed by the company`s constitutional documents. [Citation required] However, for a relatively small number of shareholders, such as in a start-up, it is common in practice for shareholders to complete the constitutional document. There are a number of reasons why shareholders wish to complete (or support) the company`s constitutional documents in this way: PandaTip: This section ensures that shareholders have the same expectations as to when they can withdraw money from the company and ensure that distributions do not erode the financial needs of the company. 7.2 In the event of a disagreement, each contracting party may require that a dividend of XX% of the company`s after-tax profit be distributed proportionately to shareholders. Shareholder agreements protect a person`s interest in a company and create rules on how a company will handle shareholder disputes. Use this shareholder contract if you want to start a business with more than one investor and clarify the rules of management of the company and how decisions should be made. Dividends are profits distributed to shareholders based on the number of shares they hold in the company. The company must have sufficient distributable profits to distribute dividends to its shareholders. The company`s profits cannot be declared distributable if shareholder loans are pending. 1.4 Contracting parties undertake not to enter into agreements or to assume any obligations of any kind that may prevent compliance with the provisions of this shareholder agreement. Shareholder agreements generally set the payment period during which dividends must be distributed by dividends and the percentage of profits distributed in each fiscal year. Directors can also determine the amount to be recommended in the form of a dividend.
A more detailed dividend distribution policy is generally included in the company`s by-statutes. PandaTip: This can be a common topic for shareholder disputes, everyone thinks the other doesn`t work hard enough, always overpaid, etc.