Shareholder Agreement South Africa
- April 12, 2021
Prior to the new Companies Act, an agreement was reached containing a clause in the following sense: if an valuation method is not defined in the agreement, it is often impossible to get two parties to agree on a value at a later date. This is particularly relevant when an existing party sells to another existing party, since the buyer and seller are on opposite pages. Legal disputes between shareholders with various experts involved in determining value are unfortunately common. We have helped many customers with a shareholder pact and we have developed many smart ways to formulate it quickly and easily. For example, the use of questionnaires and templates. Ours are worded in plain language and contain the last alternative dispute resolution clause. We offer a number of agreements for shareholders. This one is based on our standard version, which has been adapted to strengthen the control of a single member. Finally, I would like to say that a well-developed and thorough shareholders` pact is important, as it can be used by shareholders as a form of protection to protect their interests and to assert their rights. The fact that the agreement is available in writing means that the parties cannot later unilaterally amend the terms of such an agreement to escape their obligations. It is no longer possible (as of May 1, 2011) to adopt a shareholders` pact that prevails over the Memorandum and Companies Act. You may need to amend your company`s memorandum before or at the same time as signing a new shareholder pact. In other words, you must first develop a memorandum for the company, then a shareholder contract, which is in accordance with both the shareholder law and the memorandum.
You may find that the agreement is no longer necessary once you have drafted a memorandum. However, it is unlikely that an agreement will always play a very important role. One company published a new ME in 2012. This I ME opposed the shareholders` pact and some shareholders applied to the Court to adopt an order regulating shareholders` relations and thus replacing the MOI. The shareholders` agreement contained a non-variation clause stating that no changes could be made to the agreement unless all shareholders agreed in writing. For those who start a business in South Africa, it is important to consider the benefits you need or not from a shareholder pact. Please note that the information below uses the term “shareholders` pact” in the general sense of the term, as it also applies to those who participate in a close corporation, the only change being that it is called a “member agreement.” Disputes between shareholders and other stakeholders are costly and can be inconvenient and detrimental to the operation of the business. A clear agreement will be reduced and facilitate the resolution of disputes. A clear and comprehensive agreement also reduces the need for subjective decision-making by an arbitrator or judge who can give shareholders as much uncertainty and concern, especially minorities.