Ownership of shares clause: Copy, customize, and use instantly
Introduction
An ownership of shares clause defines the rights and responsibilities regarding the ownership, transfer, and protection of shares within a business or corporation. This clause is essential for clearly establishing who holds the shares, their rights to those shares, and the conditions under which the ownership may be transferred, sold, or otherwise altered.
Below are templates for ownership of shares clauses tailored to different scenarios. Copy, customize, and insert them into your agreement.
Standard ownership of shares clause
This variation applies to agreements establishing basic ownership of shares.
The ownership of the shares of [Company Name] is as follows: [Shareholder Name] holds [specific number] shares, which constitute [specific percentage]% of the total issued and outstanding shares. Ownership rights are subject to the terms and conditions outlined in this Agreement.
Transferability of shares clause
This variation applies to agreements that limit or control the transfer of shares.
The shares held by any shareholder may not be transferred, assigned, or sold to any third party without the prior written consent of [Company Name] and the other shareholders. Any transfer of shares will be subject to the conditions and restrictions set forth in the shareholder agreement.
Rights of shareholders clause
This variation applies to agreements outlining the rights of shareholders.
Shareholders shall have the right to vote on all matters that require shareholder approval, to receive dividends as declared by the board, and to transfer their shares in accordance with the terms outlined in this Agreement. Shareholders shall also have the right to inspect the company’s books and records as permitted by law.
Pre-emptive rights clause
This variation applies to agreements providing pre-emptive rights to existing shareholders.
In the event that the company issues new shares, the existing shareholders shall have a pre-emptive right to purchase such shares in proportion to their existing holdings. The terms and conditions of the pre-emptive rights shall be communicated to all shareholders before the issuance of new shares.
Share buyback clause
This variation applies to agreements with provisions for the company to repurchase shares.
The company may, at its discretion, repurchase shares from any shareholder upon request, subject to the company’s financial condition and the approval of the board of directors. The price for repurchased shares shall be determined based on the fair market value at the time of repurchase.
Restrictions on transfer of shares clause
This variation applies to agreements restricting the transfer of shares under specific conditions.
Shares may not be transferred without the approval of [specific percentage]% of the shareholders. Any proposed transfer of shares must be submitted in writing and provide sufficient information for the shareholders to assess the transfer.
Lock-up period clause
This variation applies to agreements establishing a lock-up period during which shares cannot be sold or transferred.
Shares held by the shareholders shall not be sold or transferred for a period of [specific time frame] from the date of acquisition, except in cases of a permitted transfer under this Agreement. After the lock-up period, shareholders may sell or transfer their shares in accordance with the provisions of this Agreement.
Buy-sell agreement clause
This variation applies to agreements that establish a buy-sell arrangement for shareholders.
In the event that a shareholder wishes to sell their shares or in the event of death, incapacity, or termination of employment, the remaining shareholders shall have the right to purchase the shares at a price determined by [specific valuation method]. The purchase must be completed within [specific number] days of the triggering event.
Shareholder dispute resolution clause
This variation applies to agreements requiring dispute resolution among shareholders regarding ownership.
In the event of a dispute regarding the ownership or transfer of shares, the parties agree to resolve the dispute through mediation or arbitration. The dispute shall be resolved in accordance with the procedures outlined in [specific governing rules or institution].
Share ownership registration clause
This variation applies to agreements requiring formal registration of share ownership.
The ownership of shares shall be registered in the company’s share ledger, and the company will maintain an updated list of all shareholders. Shareholders are required to notify the company of any transfer of shares, and such transfers will be recorded accordingly.
Shareholder's consent for transfer clause
This variation applies to agreements requiring shareholder consent for share transfers.
The transfer of shares by any shareholder to a third party shall require the prior written consent of [specific percentage]% of the existing shareholders. Such consent shall not be unreasonably withheld, and the transferee must agree to abide by the terms of this Agreement.
Joint ownership of shares clause
This variation applies to agreements where shares are jointly owned by two or more parties.
The shares held in [Company Name] are jointly owned by [Shareholder 1 Name] and [Shareholder 2 Name] in equal parts. Both parties must mutually agree on any decisions related to the ownership, transfer, or management of the shares.
Dividends on shares clause
This variation applies to agreements outlining dividend distribution to shareholders.
Dividends shall be distributed to the shareholders based on the number of shares held by each shareholder. Shareholders shall be entitled to receive dividends when declared by the board, in accordance with the company’s profit distribution policy.
Transfer of shares upon death clause
This variation applies to agreements outlining the transfer of shares in the event of a shareholder's death.
In the event of a shareholder’s death, the deceased shareholder’s shares shall be transferred to their designated heirs or beneficiaries, subject to the right of first refusal by the remaining shareholders to purchase such shares at fair market value.
Shareholder exit clause
This variation applies to agreements defining the process for shareholder exit.
A shareholder may exit the company and sell their shares to the remaining shareholders upon providing [specific number] months’ written notice. The purchase price for the shares will be determined based on [specific valuation method].
Shares held in trust clause
This variation applies to agreements where shares are held in a trust.
The shares of [Company Name] shall be held in trust by [Trustee Name] on behalf of the beneficial owners. The trustee shall have the authority to manage the shares, subject to the terms of the trust agreement and any decisions made by the beneficial owners.
Right of first refusal clause
This variation applies to agreements giving existing shareholders the right of first refusal.
If any shareholder intends to sell their shares to a third party, the remaining shareholders shall have the right of first refusal to purchase the shares on the same terms as those offered by the third party. The selling shareholder must offer the shares to the existing shareholders in writing.
Shareholder voting rights clause
This variation applies to agreements outlining shareholder voting rights.
Each share of [Company Name] entitles the shareholder to one vote on matters requiring shareholder approval, including but not limited to the election of directors and changes to the company’s articles of incorporation. Votes may be cast in person or by proxy.
Non-compete clause for shareholders
This variation applies to agreements that include non-compete terms for shareholders.
Any shareholder who sells or transfers their shares in [Company Name] shall agree not to engage in any business that directly competes with the company for a period of [specific time period] within [specific geographic area].
Shareholder rights to inspect books clause
This variation applies to agreements granting shareholders access to the company’s records.
Shareholders shall have the right to inspect and copy the company’s books, records, and financial statements during normal business hours, upon reasonable request. Such inspection may be subject to reasonable confidentiality requirements.
Shareholder's right to participate in decisions clause
This variation applies to agreements allowing shareholders to participate in significant company decisions.
Shareholders shall have the right to participate in decisions regarding major changes in the company, including mergers, acquisitions, or any amendments to the articles of incorporation. Participation requires written notice to all shareholders prior to the decision.
Sale of shares to competitors clause
This variation applies to agreements restricting the sale of shares to competitors.
No shareholder shall sell or transfer their shares to any competitor of [Company Name] without prior written approval from [specific percentage]% of the other shareholders. Any proposed transfer to a competitor will be considered a breach of this Agreement.
Shareholder’s confidentiality obligation clause
This variation applies to agreements requiring shareholders to maintain confidentiality.
Shareholders agree to keep confidential all proprietary information and trade secrets of [Company Name] that are obtained through their ownership of shares. This confidentiality obligation shall survive the transfer or sale of shares.
Right to call for a meeting clause
This variation applies to agreements allowing shareholders the right to request a meeting.
Any shareholder holding at least [specific percentage]% of the shares of [Company Name] has the right to call for a special meeting to discuss matters of importance to the company. The request for a meeting must be submitted in writing and must include a list of topics to be discussed.
Shareholder’s obligation to offer shares to other shareholders clause
This variation applies to agreements that require shareholders to offer shares to others before selling.
Prior to selling or transferring any shares, a shareholder shall first offer such shares to the remaining shareholders at the same price and terms as those offered by an outside buyer. If the remaining shareholders do not accept the offer within [specific number] days, the selling shareholder may proceed with the sale to the third party.
Ownership of shares by entities clause
This variation applies to agreements that allow entities to hold shares.
Shares of [Company Name] may be held by individuals or legal entities, including corporations, partnerships, or trusts. In the event of an entity holding shares, the entity must designate a representative to vote on behalf of the entity’s ownership interest.
Shareholder’s obligation to notify of transfer clause
This variation applies to agreements that require shareholders to notify the company of share transfers.
Any shareholder transferring their shares must notify [Company Name] in writing at least [specific number] days in advance of the proposed transfer. The notice shall include the identity of the transferee and the terms of the transfer.
Joint ownership of shares clause
This variation applies to agreements where shares are jointly owned by two or more parties.
The shares of [Company Name] held by [Shareholder 1 Name] and [Shareholder 2 Name] shall be jointly owned. Both parties must mutually agree on all decisions regarding the shares, including transfers, voting, and sale.
Right of shareholder to request a buyout clause
This variation applies to agreements giving shareholders the right to request a buyout.
Any shareholder may request a buyout of their shares at any time, provided that the request is made in writing to the board of directors. The company shall have the right to purchase the shares at a fair market value determined by an independent valuation.
Shareholder’s right to exit clause
This variation applies to agreements providing an exit option for shareholders.
A shareholder may exit the company and sell their shares after [specific number] years of ownership, or if the company is sold or dissolved. The price for the shares shall be determined based on a valuation conducted at the time of exit.
Shareholder’s right to transfer shares to family members clause
This variation applies to agreements allowing the transfer of shares to family members.
Shareholders may transfer their shares to immediate family members (spouse, children, or parents) without restriction, provided that the transferee agrees to abide by the terms of this Agreement. Written notice of the transfer must be provided to the company.
Shareholder’s buy-sell provision clause
This variation applies to agreements with a buy-sell provision for shareholder exit.
In the event that a shareholder wishes to sell their shares, the remaining shareholders shall have the right to purchase the shares at the current fair market value. If no shareholder purchases the shares, the company may buy them back, subject to the terms outlined in this Agreement.
Shareholder dividend distribution clause
This variation applies to agreements detailing how dividends will be distributed.
Dividends shall be distributed to shareholders in proportion to their ownership percentage. The decision to declare and distribute dividends shall be made by the board of directors based on the company’s financial performance and reserves.
Shareholder’s voting rights in the event of deadlock clause
This variation applies to agreements addressing voting rights in the case of a shareholder deadlock.
In the event of a deadlock in shareholder voting, where no decision can be made, the matter shall be referred to mediation or arbitration, as outlined in [specific section]. Until a resolution is reached, the shareholder vote shall be deemed as abstaining.
Shareholder non-compete clause
This variation applies to agreements that prevent shareholders from competing with the company.
No shareholder shall engage in any business that competes directly with [Company Name] during their ownership of shares and for a period of [specific time] after selling or transferring their shares. This restriction applies within [specific geographic area].
Shareholder right to liquidate shares clause
This variation applies to agreements allowing shareholders to liquidate their shares under certain conditions.
A shareholder may liquidate their shares under this Agreement upon providing written notice of intent to the company. The liquidation price shall be determined based on [specific valuation method], and the company reserves the right to purchase the shares within [specific number] days.
Shareholder's right to enforce clauses clause
This variation applies to agreements where shareholders can enforce certain clauses.
Shareholders of [Company Name] have the right to enforce the provisions of this Agreement, including but not limited to the rights to transfer, sell, or manage shares. Any shareholder may initiate legal action if another shareholder violates the terms of this Agreement.
Shareholder agreement termination clause
This variation applies to agreements that specify the conditions under which a shareholder agreement can be terminated.
This shareholder agreement shall remain in effect unless terminated by mutual consent of [specific percentage]% of the shareholders. The agreement may also be terminated if the company undergoes dissolution or is acquired by a third party.
Cross-purchase clause
This variation applies to agreements where shareholders can purchase each other’s shares.
In the event of a shareholder’s exit or death, the remaining shareholders shall have the right to purchase the exiting shareholder’s shares at a price determined by [specific method, e.g., fair market value, independent appraisal].
Conditional ownership transfer clause
This variation applies to agreements that place conditions on the transfer of shares.
The transfer of shares is subject to the condition that the transferee agrees to adhere to all the terms of this shareholder agreement. Any transfer without such agreement is void and will not be recognized by the company.
Shareholder's liability clause
This variation applies to agreements that limit or define shareholder liability.
Shareholders shall have limited liability to the extent of their investment in the company. No shareholder shall be personally liable for the debts or obligations of the company beyond the amount of their shares.
Redemption of shares clause
This variation applies to agreements where the company can redeem shares from shareholders.
The company shall have the right to redeem shares from any shareholder at fair market value upon written notice from the board of directors. Redemption terms, including pricing and timelines, will be determined by the company in accordance with its financial condition.
Dilution of ownership clause
This variation applies to agreements outlining the potential dilution of ownership due to new share issuance.
Shareholders acknowledge that the issuance of additional shares may dilute their ownership percentage. Any such issuance will be subject to the approval of [specific percentage]% of the shareholders, unless otherwise specified in this Agreement.
Non-transferable shares clause
This variation applies to agreements that restrict the transfer of shares.
The shares issued under this Agreement are non-transferable and may not be sold, assigned, or transferred without the prior written consent of [specific percentage]% of the other shareholders, except in cases of inheritance or by operation of law.
Right of first refusal in case of death clause
This variation applies to agreements giving surviving shareholders the right of first refusal on shares upon a shareholder's death.
Upon the death of a shareholder, the remaining shareholders shall have the right of first refusal to purchase the deceased shareholder’s shares. The price for the shares shall be determined by an independent valuation at the time of death.
Shareholder's drag-along right clause
This variation applies to agreements allowing a majority shareholder to compel minority shareholders to sell their shares in the event of an acquisition.
If a majority of the shareholders agree to sell the company, the minority shareholders shall be required to sell their shares on the same terms and conditions as the majority. The drag-along right may be exercised by [specific percentage]% of the shareholders.
Valuation method for shares clause
This variation applies to agreements specifying the method for valuing shares.
The value of shares for any transfer, buyout, or dispute resolution shall be determined by an independent appraiser agreed upon by both parties. The appraiser’s determination shall be final and binding.
Voting agreement clause
This variation applies to agreements requiring shareholders to vote in a certain way.
Shareholders agree to vote in favor of [specific matter, e.g., merger, acquisition, or board election] as directed by [specific percentage]% of the shareholders. Failure to comply with this agreement shall result in a penalty as outlined in [specific section].
Shareholder protection clause
This variation applies to agreements that protect minority shareholders.
The rights of minority shareholders shall be protected by ensuring that any decision requiring shareholder approval, including changes to the company’s articles or bylaws, must be approved by at least [specific percentage]% of the minority shareholders.
Lock-in period for shares clause
This variation applies to agreements with a lock-in period for shareholders.
Shares held by any shareholder may not be sold, transferred, or otherwise disposed of for a period of [specific duration] from the date of purchase, except under circumstances outlined in this Agreement. Any violation of this lock-in period will result in penalties as defined in [specific section].
Shareholder's consent for major business decisions clause
This variation applies to agreements requiring shareholder approval for major decisions.
Any major business decisions, including mergers, acquisitions, or changes to the company’s business model, shall require the consent of [specific percentage]% of the shareholders. Shareholders will be notified of such decisions in writing and given the opportunity to vote.
Transfer of shares to family members clause
This variation applies to agreements permitting the transfer of shares to family members.
Shareholders may transfer their shares to immediate family members (spouse, children, or parents) without restriction. Such transfers must be documented, and the transferee must agree to abide by the terms of this Agreement.
Shareholder’s exit strategy clause
This variation applies to agreements outlining exit strategies for shareholders.
The exit strategy for any shareholder, including a sale or transfer of shares, shall be mutually agreed upon by the board and the shareholder. The strategy must ensure fair compensation and a reasonable exit timeline.
Transfer of shares to the company clause
This variation applies to agreements allowing shareholders to sell their shares back to the company.
Any shareholder wishing to exit the company may sell their shares back to the company at fair market value, as determined by an independent valuation. The company is not obligated to purchase the shares but may do so at its discretion.
Right to maintain ownership percentage clause
This variation applies to agreements allowing shareholders to maintain their ownership percentage.
In the event of new share issuance, each existing shareholder shall have the right to purchase additional shares in proportion to their existing ownership percentage to maintain their ownership stake in the company. The right to purchase will be exercised within [specific number] days of notice.
Share transfer upon insolvency clause
This variation applies to agreements requiring the transfer of shares upon a shareholder's insolvency.
In the event that a shareholder becomes insolvent or enters bankruptcy, their shares shall be automatically transferred to the company or to other shareholders, subject to a buyout at fair market value as determined by an independent appraisal.
Share ownership restrictions clause
This variation applies to agreements that place restrictions on share ownership.
Share ownership in [Company Name] shall be limited to [specific group or type of individual, e.g., individuals, legal entities, residents of a specific region]. Any attempt to transfer shares to an ineligible owner will be considered void and unenforceable.
Shareholder’s obligation to maintain shares clause
This variation applies to agreements that require shareholders to maintain their shares for a specified period.
Shareholders agree to hold their shares in the company for a minimum period of [specific number] years. Any sale or transfer of shares within this period requires the approval of [specific percentage]% of other shareholders, unless the shareholder is exiting due to [specific conditions].
Shareholder approval for new shareholder clause
This variation applies to agreements that require shareholder approval before new shareholders can join the company.
Any individual or entity seeking to purchase shares in the company must first obtain approval from [specific percentage]% of the existing shareholders. Approval will not be unreasonably withheld if the potential shareholder is in alignment with the company’s values and objectives.
Shareholder’s obligation to notify company of transfer clause
This variation applies to agreements requiring shareholders to notify the company before transferring shares.
Shareholders must provide [Company Name] with written notice of any intended transfer of shares, including the identity of the transferee and the terms of the transfer, at least [specific number] days before the transfer takes place.
Shareholder voting agreement clause
This variation applies to agreements requiring shareholders to vote in a unified manner.
Shareholders agree to vote in favor of [specific company decisions, e.g., the election of directors, company mergers] in accordance with a majority vote. Any shareholder failing to comply with the agreed-upon vote will be subject to [specific penalty].
Rights upon liquidation clause
This variation applies to agreements outlining shareholder rights in the event of liquidation.
In the event of the liquidation of [Company Name], shareholders shall be entitled to receive their pro-rata share of the company’s remaining assets after all liabilities have been settled. The distribution of assets shall be made in accordance with the order of priority set forth in the company’s articles of incorporation.
Shareholder’s right to nominate directors clause
This variation applies to agreements granting shareholders the right to nominate directors.
Shareholders holding at least [specific percentage]% of the company’s shares shall have the right to nominate [specific number] directors to the board of directors. Nominations must be submitted in writing to the board at least [specific number] days prior to the annual shareholder meeting.
Shareholder redemption rights clause
This variation applies to agreements giving shareholders the right to redeem their shares.
A shareholder may, at any time, request the redemption of their shares at fair market value. The company is not obligated to redeem the shares but may do so at its discretion within [specific number] days of the redemption request.
Automatic transfer of shares on death clause
This variation applies to agreements requiring the automatic transfer of shares upon a shareholder's death.
Upon the death of a shareholder, their shares shall be automatically transferred to their designated heirs or beneficiaries, subject to the approval of the remaining shareholders. If no beneficiary is designated, the shares will be transferred according to the deceased’s will or applicable laws.
Buy-sell mechanism for exiting shareholders clause
This variation applies to agreements with a buy-sell mechanism for exiting shareholders.
If a shareholder wishes to exit the company, the remaining shareholders shall have the option to purchase the exiting shareholder’s shares at fair market value. If the remaining shareholders do not exercise this option, the company may purchase the shares under the same terms.
Shareholder’s non-compete clause
This variation applies to agreements preventing shareholders from competing with the company.
No shareholder shall, for a period of [specific number] years after transferring or selling their shares, engage in any business that competes directly with the company in [specific geographic region]. Violation of this provision will result in a penalty of [specific amount].
Shareholder’s right to sell shares clause
This variation applies to agreements that grant shareholders the right to sell their shares under certain conditions.
A shareholder may sell their shares to any third party, provided that the sale price is no less than the fair market value of the shares, as determined by an independent appraiser. The sale shall be subject to the right of first refusal by the other shareholders.
Dispute resolution for shareholders clause
This variation applies to agreements that provide a mechanism for resolving shareholder disputes.
Any dispute between shareholders regarding ownership, transfer, or management of shares shall be resolved through arbitration, with an arbitrator selected from [specific arbitration body]. The decision of the arbitrator will be binding on all parties involved.
Shareholder’s obligation to adhere to company policies clause
This variation applies to agreements that require shareholders to follow company policies.
Shareholders agree to adhere to all company policies and governance documents, including but not limited to the company’s code of conduct, shareholder agreements, and bylaws. Failure to comply may result in the suspension of voting rights or forced sale of shares.
Pre-emptive rights on new shares clause
This variation applies to agreements offering pre-emptive rights to existing shareholders when new shares are issued.
In the event of a new issuance of shares, existing shareholders will have the pre-emptive right to purchase additional shares in proportion to their existing ownership to prevent dilution of their equity. The pre-emptive right must be exercised within [specific number] days of the offering.
Ownership of shares upon sale of the company clause
This variation applies to agreements regarding ownership rights when the company is sold.
Upon the sale of [Company Name], shareholders shall receive a pro-rata share of the sale price based on their percentage of ownership in the company. The distribution shall be made after the payment of any outstanding debts or obligations of the company.
Investor rights for shareholders clause
This variation applies to agreements outlining specific rights for investor shareholders.
Shareholders who are also investors shall have additional rights to access financial reports, receive annual dividends, and have input on decisions that may affect the value of their investment, including mergers, acquisitions, or changes in business strategy.
Shareholder’s right to inspect company records clause
This variation applies to agreements that allow shareholders to inspect company records.
Shareholders shall have the right to inspect the company’s financial records, board minutes, and shareholder registers upon written request. The request must be made at least [specific number] days in advance, and inspection shall occur during regular business hours.
Equity-based compensation clause
This variation applies to agreements offering equity-based compensation to shareholders.
In addition to the regular payment for goods and services, [Company Name] may issue equity-based compensation to shareholders in the form of stock options or restricted shares. The terms and conditions of such compensation shall be detailed in a separate agreement.
Limitations on transfer of shares to outside parties clause
This variation applies to agreements that limit the transfer of shares to non-shareholders.
No shareholder shall transfer or sell their shares to any individual or entity that is not currently a shareholder of the company, except as otherwise allowed in this Agreement. Any attempt to transfer shares to an outside party without consent will result in the automatic voiding of the transfer.
Mandatory buyback clause for departing shareholders
This variation applies to agreements with mandatory buyback provisions for shareholders leaving the company.
If a shareholder decides to exit [Company Name], the company shall have the right to buy back the shareholder’s shares at fair market value. The buyback must be completed within [specific number] days of the shareholder’s notice of exit.
Shareholder's participation in profits clause
This variation applies to agreements specifying how shareholders participate in company profits.
Shareholders shall be entitled to participate in the company’s profits in proportion to their shareholding. Profit distributions will be made on an annual basis, subject to the approval of the board of directors.
Exemption for sale of shares to family members clause
This variation applies to agreements that allow the transfer of shares to family members without restriction.
Shareholders may transfer their shares to immediate family members (spouse, children, or parents) without restriction, provided that the transferee agrees to be bound by the terms of this Agreement and that written notice is provided to the company within [specific number] days.
Voting by proxy clause
This variation applies to agreements that allow shareholders to vote by proxy.
Shareholders may appoint a proxy to vote on their behalf at any shareholder meeting. The appointment must be made in writing and submitted to the company at least [specific number] days prior to the meeting.
Escrow agreement for shareholder funds clause
This variation applies to agreements that require shareholder funds to be placed in escrow.
Any funds provided by shareholders for investment purposes shall be held in escrow by an independent third party until certain conditions are met. The escrow agreement will outline the release conditions and the handling of funds during the term of the agreement.
Sale of shares in the event of a dispute clause
This variation applies to agreements requiring the sale of shares in the event of a dispute.
If a dispute arises between shareholders that cannot be resolved within [specific time period], any shareholder may request the sale of their shares. The company or other shareholders will have the option to purchase the shares at a price determined by an independent valuation.
Approval of shareholder actions clause
This variation applies to agreements requiring shareholder approval for certain actions.
No significant action shall be taken by the company, including but not limited to mergers, acquisitions, or changes to the business model, without the approval of at least [specific percentage]% of the shareholders. Shareholder consent shall be obtained through a formal vote.
Shareholder’s obligation to contribute capital clause
This variation applies to agreements requiring shareholders to contribute additional capital.
Each shareholder agrees to contribute additional capital to [Company Name] upon request by the board of directors to cover operating expenses or expand the company’s operations. The required contribution will be proportional to the shareholder’s ownership percentage.
Shareholder's exit payment terms clause
This variation applies to agreements specifying exit payment terms for shareholders.
Upon the exit of a shareholder, the company will pay the exiting shareholder the agreed-upon value of their shares based on [specific valuation method]. Payments will be made in [installments/full amount] and completed within [specific number] months after the exit.
Conversion of shares clause
This variation applies to agreements that allow the conversion of shares.
Shares of [Company Name] may be converted into different classes of shares at the discretion of the board of directors. Any conversion will be made in accordance with the terms outlined in this Agreement, and shareholders will be notified prior to the conversion.
Shareholder’s right to transfer shares in case of death or incapacity clause
This variation applies to agreements specifying the transfer of shares upon a shareholder's death or incapacity.
Upon the death or incapacity of a shareholder, their shares shall be transferred to their designated heirs or beneficiaries, subject to approval by [specific percentage]% of the other shareholders. If no such designation exists, the shares will be transferred to the remaining shareholders in proportion to their existing ownership.
Shareholder’s liability for company debts clause
This variation applies to agreements defining shareholder liability.
Shareholders of [Company Name] shall not be personally liable for the debts or obligations of the company, except to the extent of their unpaid share capital. No shareholder shall be required to contribute more than the value of their shares to the company’s liabilities.
Management rights for major shareholders clause
This variation applies to agreements granting management rights to major shareholders.
Shareholders owning [specific percentage]% or more of the shares of [Company Name] shall have the right to appoint [specific number] members to the board of directors. These major shareholders may also have input on major business decisions, including [specific matters].
Right to offer shares to employees clause
This variation applies to agreements allowing the company to offer shares to employees.
The company reserves the right to offer shares to its employees as part of an employee stock ownership plan (ESOP). The price and terms of such offers shall be determined by the board of directors and communicated to eligible employees.
Shareholder's obligation to notify about external offers clause
This variation applies to agreements requiring shareholders to notify the company of external offers.
If a shareholder receives an offer to purchase their shares from an external party, they must notify the company within [specific number] days of the offer. The company or other shareholders may then exercise a right of first refusal to purchase the shares on the same terms.
Shareholder’s indemnification rights clause
This variation applies to agreements specifying indemnification rights for shareholders.
[Company Name] agrees to indemnify shareholders against any claims, damages, or losses incurred in connection with their ownership of shares, provided such claims arise out of the company’s actions or omissions, and are not caused by the shareholder's own misconduct.
Shareholder’s agreement to abide by company bylaws clause
This variation applies to agreements requiring shareholders to comply with the company’s bylaws.
All shareholders agree to abide by the bylaws of [Company Name] as currently in effect or as amended. Any violation of these bylaws by a shareholder may result in penalties or the forced sale of their shares, subject to approval by [specific percentage]% of other shareholders.
Right to review share transfers clause
This variation applies to agreements requiring review of share transfers by the company or board.
Any transfer of shares by a shareholder must be reviewed and approved by the board of directors to ensure compliance with the company’s policies. If the board does not approve the transfer, the shareholder may not proceed with the sale or transfer of shares.
Forced sale of shares clause
This variation applies to agreements that allow for the forced sale of shares under certain conditions.
In the event that a shareholder breaches the terms of this Agreement or fails to fulfill their obligations, the company or remaining shareholders may demand the forced sale of the defaulting shareholder’s shares at fair market value. The forced sale must be completed within [specific number] days of the demand.
Voting power based on share ownership clause
This variation applies to agreements where voting power is tied to share ownership.
Each shareholder’s voting power at any shareholder meeting shall be proportional to the number of shares they hold in [Company Name]. Each share shall carry one vote unless otherwise specified in the company’s articles of incorporation.
Shareholder’s right to redeem shares clause
This variation applies to agreements allowing shareholders to redeem their shares.
A shareholder may redeem their shares at any time by notifying the company in writing. The company will redeem the shares at fair market value, as determined by an independent valuation, within [specific number] days of receiving the redemption request.
Exit strategy for shareholder clause
This variation applies to agreements specifying an exit strategy for shareholders.
Shareholders may initiate an exit strategy, including selling their shares or transferring ownership, after [specific number] years of ownership. The terms for the exit strategy, including the price and conditions, will be agreed upon at the time of initiation.
Shareholder’s right to approve company actions clause
This variation applies to agreements requiring shareholder approval for certain company actions.
Shareholders must approve any major decisions affecting the company, including but not limited to mergers, acquisitions, and changes to the business model. Approval shall be obtained through a shareholder vote, and decisions require the approval of at least [specific percentage]% of the shareholders.
Change of control clause for shares
This variation applies to agreements detailing share ownership upon a change of control.
In the event of a change of control of [Company Name], shareholders will be required to sell their shares to the acquiring party at a price determined by an independent valuation. The terms of this sale shall be governed by the specific change of control provisions set forth in the company’s governing documents.
Restrictions on foreign ownership of shares clause
This variation applies to agreements restricting foreign ownership of shares.
No shareholder may be a foreign entity or individual who is prohibited from owning shares under [jurisdiction’s] laws or regulations. Any foreign shareholder must obtain prior approval from the board of directors before purchasing shares in [Company Name].
Shareholder’s commitment to non-disclosure clause
This variation applies to agreements requiring shareholders to maintain confidentiality.
Shareholders agree to maintain the confidentiality of all proprietary information, trade secrets, and sensitive data of the company. This obligation shall survive the transfer of shares and the termination of their shareholder status.
Shareholder’s right to transfer shares to affiliates clause
This variation applies to agreements permitting the transfer of shares to affiliates.
A shareholder may transfer their shares to affiliates or subsidiaries without requiring the approval of other shareholders. However, the transferring shareholder remains responsible for ensuring that the transferee agrees to abide by the terms of this Agreement.
Pre-emptive rights upon new share issuance clause
This variation applies to agreements providing pre-emptive rights upon new share issuance.
In the event that the company issues new shares, existing shareholders shall have the pre-emptive right to purchase additional shares in proportion to their existing holdings. Shareholders must exercise their pre-emptive rights within [specific number] days of receiving the offer.
Shareholder's responsibility for debts clause
This variation applies to agreements outlining a shareholder’s responsibility for company debts.
Shareholders of [Company Name] shall not be personally liable for the company’s debts or obligations, except to the extent of their unpaid shares. No shareholder will be required to contribute more than the amount invested in the company.
Sale of shares due to shareholder misconduct clause
This variation applies to agreements requiring the sale of shares due to shareholder misconduct.
If a shareholder is found guilty of misconduct or actions that negatively impact the company, as determined by a majority of shareholders, that shareholder may be required to sell their shares at fair market value to the remaining shareholders or to the company.
Transfer of shares in case of divorce clause
This variation applies to agreements addressing the transfer of shares in the event of a shareholder’s divorce.
In the event of a shareholder’s divorce, their shares may be transferred to their spouse or other designated individual, subject to approval by the board of directors. The transfer will be contingent upon the spouse or transferee agreeing to abide by the terms of this Agreement.
Withdrawal of shareholder rights clause
This variation applies to agreements that revoke shareholder rights under specific conditions.
In the event a shareholder fails to comply with the terms of this Agreement, including failure to pay the required capital contributions or failure to attend shareholder meetings, their rights to vote or receive dividends may be temporarily suspended or revoked.
Payment for shares in installment clause
This variation applies to agreements allowing shareholders to pay for their shares in installments.
Shareholders may pay for their shares in [specific number] installments. The initial installment is due upon execution of this Agreement, and the remaining installments are due on [specific dates]. Any unpaid installments will result in the forfeiture of the shares.
Redemption of shares due to shareholder disagreement clause
This variation applies to agreements providing for the redemption of shares if shareholders disagree.
In the event of an irreconcilable disagreement between shareholders, any shareholder involved in the dispute may request the redemption of their shares at fair market value. The company will be required to redeem the shares within [specific number] days.
Equal rights of all shareholders clause
This variation applies to agreements ensuring equal rights for all shareholders.
All shareholders shall have equal rights in the company, including voting rights, rights to dividends, and rights to transfer shares, subject to the terms of this Agreement. No shareholder shall have preferential treatment over others unless otherwise stated in this Agreement.
Shareholder’s option to purchase additional shares clause
This variation applies to agreements granting shareholders the option to purchase additional shares.
Existing shareholders will have the option to purchase additional shares at the same price as the initial issuance, subject to availability and approval by the board. The option to purchase additional shares must be exercised within [specific number] days of the notice.
This article contains general legal information and does not contain legal advice. Cobrief is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.