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Questions every Shareholder should answer
September 29, 2008 – 12:39 pm by John Giles
It is essential that shareholders of each company sign a shareholders agreement - preferably at the beginning of the relationship. Read our article Mother of all disputes to find out why. In preparation for concluding a shareholders agreement, each shareholder should read and consider the issues raised in the following questions. The shareholders should then collectively debate the issues and find common ground. The task of then drafting and concluding the shareholders agreement is much easier.
In our Shareholders Agreement template, we provide various examples of how these issues can be dealt with. These questions should therefore really be considered in conjunction with that template.
1 Shareholding
Precisely who the shareholders will be and what will their shareholding (expressed as a percentage) in the company will be?
2 Directors
- You must decide what the maximum number of directors will be.
- Whether or not each shareholder will be entitled to appoint a director.
- Who the initial directors of the company will be.
- Whether or not there will be a chairman of the board and managing director;
- Whether or not the chairman will have a casting vote in addition to his deliberate vote.
- Whether or not the directors will be remunerated, and if so on what basis.The rest of this article is only available to a registered user with one of the following subscriptions: Trial, Free, Client, Student, Subscriber. To continue reading this article, please either:
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4 Responses to “Questions every Shareholder should answer”
I’m in the financial planning and wealth management industry. I would like to email this to my business owner clients, this is an initiative that I would like to take by adding value to my clients.
Would this be ok with you?
By Frank Agliotti on Apr 3, 2009
Thanks for the comment. Please feel free to email a link to the article (http://www.michalsons.com/questions-every-shareholder-should-answer/353) to your clients. They will need to register for free on Michalsons Online to be able to read the whole article though. Please let me know if you would like to provide it to them in a different format. Kind regards, John
By John Giles on Apr 6, 2009
THX FOR THE INFO,BUT IF PARTY “A” SUPPLY THE MONEY WITH “A” 50% INTREST IN THE CC AND PATRY “B”50% NONE,WHO HAVE THE DESIDDING VOTE OR LAST SAY? NO OTHER DOCUMENTS IS IN PLACE EXEPT CC DOCUMENT
By JUNIOR BLOM on May 29, 2009
Regards voting, it is largely irrelevant who contributed the money. On the face of it without knowing anything more than the information provided, you each have an equal vote. The general principles in the Close Corporation Act apply in the absence of an association agreement. Have a look at section 46, 47, and 48 of the Close Corporations Act.
By John Giles on May 30, 2009