Shareholder clause: Copy, customize, and use instantly
Introduction
A shareholder clause outlines the rights, responsibilities, and obligations of the company’s shareholders. This clause ensures clarity on voting rights, shareholder meetings, dividends, and any specific rights granted to shareholders, including those related to transfer of shares, protection from dilution, and other shareholder-specific matters.
Below are templates for shareholder clauses tailored to different scenarios. Copy, customize, and insert them into your agreement.
Standard shareholder clause
This version includes basic shareholder rights.
The shareholders of the [Company] shall have the right to vote at annual and special meetings, receive dividends when declared by the Board of Directors, and transfer their shares in accordance with the company’s bylaws. The rights of the shareholders will be governed by the terms of this agreement and applicable law.
Shareholder clause with voting rights
This version includes voting rights for shareholders.
Each shareholder shall have voting rights proportional to the number of shares they hold in the company. Voting may occur at annual general meetings, special meetings, or through proxy voting. Each share shall entitle the holder to one vote unless otherwise specified in the company’s articles of incorporation.
Shareholder clause with transfer of shares
This version includes restrictions on the transfer of shares.
Shares of the company may not be transferred, sold, or otherwise disposed of without the prior written consent of the Board of Directors, except as permitted under the company’s shareholder agreement. Any transfer must comply with applicable securities laws and may be subject to approval by the Board.
Shareholder clause with protection from dilution
This version includes protection from dilution.
In the event of any new issuance of shares, shareholders shall have the right to purchase additional shares to maintain their proportional ownership in the company. The company will offer these rights to existing shareholders before offering shares to third parties.
Shareholder clause with dividends
This version includes provisions for dividends.
The Board of Directors may declare dividends at its discretion, subject to the availability of profits. Shareholders will be entitled to receive dividends on their shares in proportion to the number of shares held, subject to the company’s financial condition and the terms outlined in this agreement.
Shareholder clause with shareholder meetings
This version includes provisions for shareholder meetings.
The company shall hold an annual general meeting of shareholders within [X] months of the end of its fiscal year. Special meetings may be called by the Board of Directors or by shareholders holding at least [X]% of the company’s outstanding shares. Notice of meetings will be sent to all shareholders at least [X] days prior to the meeting.
Shareholder clause with rights of first refusal
This version includes rights of first refusal for shareholders.
If any shareholder intends to sell or transfer their shares to a third party, the company and/or the remaining shareholders shall have the right of first refusal to purchase the shares on the same terms and conditions offered by the third party.
Shareholder clause with tag-along rights
This version includes tag-along rights for shareholders.
In the event that a majority shareholder intends to sell their shares to a third party, minority shareholders shall have the right to "tag along" and sell their shares on the same terms and conditions as the majority shareholder, ensuring they are not left behind in the sale.
Shareholder clause with drag-along rights
This version includes drag-along rights for shareholders.
If shareholders holding at least [X]% of the company’s shares agree to sell their shares to a third party, the remaining shareholders shall be obligated to sell their shares on the same terms. This provision ensures that the company can be sold in its entirety without holdout shareholders.
Shareholder clause with share repurchase option
This version includes a share repurchase option.
The company shall have the right, but not the obligation, to repurchase shares from any shareholder at a fair market value. The repurchase of shares will be subject to the company’s financial condition and the availability of funds, and may be executed at the discretion of the Board of Directors.
Shareholder clause with consent rights for major decisions
This version includes consent rights for major decisions.
Certain major decisions, including mergers, acquisitions, or the sale of substantial assets, shall require the approval of shareholders holding at least [X]% of the outstanding shares. The company will seek shareholder approval for these decisions through a special meeting or written consent.
Shareholder clause with anti-takeover provisions
This version includes anti-takeover provisions for shareholders.
In the event of a hostile takeover attempt, shareholders shall have the right to enact anti-takeover measures, including the issuance of new shares or the implementation of a poison pill strategy. These provisions are designed to protect the company from unsolicited acquisition attempts.
Shareholder clause with information rights
This version includes information rights for shareholders.
Shareholders shall have the right to receive regular updates on the company’s financial performance, operations, and strategic plans. Shareholders may request additional information, including financial statements and business forecasts, at any time, subject to confidentiality agreements.
Shareholder clause with participation in new funding rounds
This version includes participation in new funding rounds.
Shareholders shall have the right to participate in any future funding rounds or capital raises initiated by the company. Shareholders will be offered the opportunity to purchase additional shares on a pro-rata basis, ensuring their proportionate ownership is maintained.
Shareholder clause with shareholder buyout provisions
This version includes provisions for shareholder buyouts.
In the event that a shareholder wishes to exit the company, the company or remaining shareholders will have the right to buy out the shareholder’s interest at a fair market value. The terms of the buyout will be negotiated by the Board of Directors and the exiting shareholder.
Shareholder clause with voting agreement
This version includes a voting agreement among shareholders.
Shareholders may enter into a voting agreement to collectively agree on how to vote on certain matters, such as the election of directors or approval of major corporate actions. The terms of the voting agreement will be disclosed to all shareholders and the Board of Directors.
Shareholder clause with shareholder rights during liquidation
This version includes shareholder rights during liquidation.
In the event of liquidation or dissolution of the company, shareholders will receive their proportionate share of any remaining assets after the payment of liabilities. The distribution of assets will be made according to the class and number of shares held by each shareholder.
Shareholder clause with preemptive rights
This version includes preemptive rights for shareholders.
Shareholders shall have preemptive rights to purchase newly issued shares in the company before such shares are offered to external investors. The preemptive rights allow shareholders to maintain their ownership percentage in the company.
Shareholder clause with shareholder exit plan
This version includes a shareholder exit plan.
The company shall develop a shareholder exit plan, which outlines the procedure for shareholders wishing to exit the company. The exit plan will address buyouts, share repurchases, and other methods for facilitating the smooth transition of ownership.
Shareholder clause with shareholder agreement confidentiality
This version includes confidentiality for the shareholder agreement.
The shareholder agreement and any related discussions will be considered confidential and cannot be disclosed to third parties without prior consent from the Board of Directors, except as required by law. Shareholders must sign a confidentiality agreement upon entering into the shareholder agreement.
Shareholder clause with shareholder dispute resolution
This version includes a dispute resolution process for shareholders.
In the event of a dispute between shareholders, the company will facilitate a resolution process, including mediation or arbitration. The dispute resolution process will aim to resolve conflicts efficiently and fairly, avoiding litigation wherever possible.
Shareholder clause with annual disclosure requirement
This version includes an annual disclosure requirement for shareholders.
Each shareholder is required to disclose any changes in their shareholding to the company on an annual basis. The disclosure must include the number of shares held and any transactions involving the sale or transfer of shares during the reporting period.
Shareholder clause with shareholder advisory committee
This version includes a shareholder advisory committee.
The company may establish a shareholder advisory committee to provide input on significant corporate decisions. This committee will consist of a select group of shareholders who will be consulted on matters such as mergers, acquisitions, or changes in business strategy.
Shareholder clause with equal treatment for shareholders
This version ensures equal treatment for shareholders.
All shareholders shall be treated equally, regardless of the class or type of shares they hold, except as otherwise specified in the company’s articles of incorporation. Any dividends, distributions, or other shareholder benefits will be allocated equally, except as otherwise stated.
Shareholder clause with shareholder agreement amendments
This version includes a process for amending the shareholder agreement.
Any amendments to the shareholder agreement must be approved by shareholders holding at least [X]% of the company’s outstanding shares. Proposed amendments will be discussed at the annual meeting or at a specially called meeting, with the full text of the proposed changes provided in advance.
Shareholder clause with shareholder right to call meetings
This version includes the right for shareholders to call meetings.
Shareholders holding at least [X]% of the company’s shares have the right to call a special meeting of shareholders. The request must be submitted in writing to the Board of Directors, stating the purpose of the meeting and any specific issues to be addressed.
Shareholder clause with right to inspect books and records
This version includes the right to inspect company records.
Shareholders shall have the right to inspect and copy the company’s books, records, and financial statements upon request. This right shall be exercised during normal business hours, and any requested copies shall be provided at the shareholder’s expense.
Shareholder clause with rights to approve major corporate actions
This version includes shareholder approval for major actions.
Certain corporate actions, including mergers, acquisitions, or the issuance of new shares, shall require the approval of shareholders holding at least [X]% of the company’s shares. The company shall seek shareholder approval through a vote at the annual general meeting or at a specially called meeting.
Shareholder clause with exit event rights
This version includes rights triggered by an exit event.
Shareholders shall have the right to exit the company through a sale, merger, or other exit event. In the event of a sale or merger, shareholders will receive their pro-rata share of the sale proceeds, as determined by the number of shares held.
Shareholder clause with restriction on voting by proxy
This version includes restrictions on proxy voting.
Shareholders may vote by proxy at shareholder meetings, provided that the proxy is submitted in writing before the meeting and complies with the company’s bylaws. However, proxy voting may be restricted for certain matters, such as the election of directors or approval of major corporate actions.
Shareholder clause with restrictions on transfer of shares
This version includes transfer restrictions for shareholders.
The transfer of shares by any shareholder shall be subject to the approval of the Board of Directors, and may not be transferred to a competitor or other party without the company’s consent. Any transfer that violates this provision shall be considered invalid.
Shareholder clause with dispute resolution process
This version includes a dispute resolution process for shareholders.
In the event of a dispute between shareholders, the parties agree to submit the matter to binding arbitration. The arbitration shall take place in [City, State] and shall be conducted under the rules of [Arbitration Organization], with the decision being final and binding on all parties.
Shareholder clause with dividend reinvestment option
This version includes a dividend reinvestment option.
Shareholders may elect to reinvest their dividends into additional shares of the company rather than receive cash payments. The dividend reinvestment plan will allow shareholders to purchase shares at a [discounted price] and may be subject to approval by the Board.
Shareholder clause with rights to receive information about major transactions
This version includes information rights for major transactions.
Shareholders shall be entitled to receive detailed information about any major transactions, such as mergers, acquisitions, or asset sales, that may significantly affect the company. Information will be provided within [X] days of the transaction being announced, and shareholders will have the right to vote on such transactions.
Shareholder clause with liquidation rights
This version includes shareholder rights during liquidation.
In the event of the liquidation or dissolution of the company, shareholders shall have the right to receive their proportionate share of any remaining assets after all debts and liabilities have been satisfied. The liquidation process shall be conducted in accordance with the company’s bylaws and applicable law.
Shareholder clause with change of control provisions
This version includes change of control provisions for shareholders.
In the event of a change of control, including a sale of a majority interest in the company, shareholders shall have the right to exit at the time of the change. The company may offer shareholders the opportunity to sell their shares on the same terms and conditions as those offered to the acquiring party.
Shareholder clause with shareholder communication policy
This version includes a communication policy for shareholders.
The company will establish a shareholder communication policy to ensure transparency and regular updates to shareholders on the company’s performance, strategy, and major developments. Shareholders will receive quarterly financial reports and will have access to an investor relations portal for additional information.
Shareholder clause with tag-along rights for minority shareholders
This version includes tag-along rights for minority shareholders.
In the event that the majority shareholder sells their shares to a third party, minority shareholders shall have the right to “tag along” and sell their shares on the same terms and conditions. This ensures that minority shareholders can participate in the transaction and benefit from the sale.
Shareholder clause with right to purchase additional shares
This version includes a right to purchase additional shares.
Shareholders shall have the right to purchase additional shares in the company whenever new shares are issued. This right will allow existing shareholders to maintain their proportional ownership and avoid dilution of their equity interest in the company.
Shareholder clause with shareholder buyout provisions
This version includes buyout provisions for shareholders.
In the event that a shareholder wishes to exit the company, the remaining shareholders or the company itself shall have the option to buy out the exiting shareholder’s shares. The buyout price will be determined based on the fair market value of the shares at the time of the buyout.
Shareholder clause with restriction on selling shares to competitors
This version includes a restriction on selling shares to competitors.
Shareholders shall not sell, transfer, or otherwise dispose of their shares to any competitor of the company without the prior written consent of the Board of Directors. This restriction aims to prevent conflicts of interest and protect the company’s competitive advantage.
Shareholder clause with quarterly performance reports
This version includes quarterly performance reports for shareholders.
The company will provide quarterly performance reports to shareholders, detailing the company’s financial performance, operational achievements, and strategic goals. These reports will be distributed within [X] days of the end of each quarter.
Shareholder clause with unanimous approval for certain actions
This version requires unanimous approval for certain actions.
Certain actions, including amendments to the company’s articles of incorporation or the issuance of new shares that would significantly dilute current shareholders, shall require unanimous approval from all shareholders. This ensures that major decisions are made with the consent of all stakeholders.
Shareholder clause with right to nominate board members
This version includes the right to nominate board members.
Shareholders holding at least [X]% of the company’s shares shall have the right to nominate one or more members to the Board of Directors. Nominations will be reviewed by the Nominating Committee and presented for shareholder approval.
Shareholder clause with pre-emptive rights for capital raises
This version includes pre-emptive rights for capital raises.
Shareholders will have pre-emptive rights to purchase additional shares in the event of a new capital raise, allowing them to maintain their proportionate ownership in the company. These rights must be exercised within [X] days of receiving notice of the new issuance.
Shareholder clause with restriction on shareholder loans
This version includes restrictions on loans from shareholders.
Shareholders shall not provide loans to the company without prior approval from the Board of Directors. Any loans provided must be in compliance with applicable laws and regulations and be subject to the terms agreed upon by the Board.
Shareholder clause with ownership reporting requirements
This version includes reporting requirements for shareholders.
Shareholders holding [X]% or more of the company’s shares are required to report any changes in their ownership to the company within [Y] days of the transaction. This ensures that the company has accurate and up-to-date records of its shareholder base.
Shareholder clause with forced sale option
This version includes a forced sale option for shareholders.
The company may require shareholders to sell their shares in the event of a corporate restructuring, IPO, or acquisition. The terms of the forced sale will be determined by the company and the majority shareholders, and will include a fair market price for the shares.
Shareholder clause with approval for mergers and acquisitions
This version includes shareholder approval for mergers.
Any merger, acquisition, or sale of the company will require the approval of shareholders holding at least [X]% of the company’s outstanding shares. The company shall provide shareholders with detailed information about the proposed transaction prior to the vote.
Shareholder clause with buyout options for minority shareholders
This version includes buyout options for minority shareholders.
Minority shareholders may offer their shares for sale to the company or to majority shareholders at any time. The buyout price will be based on the fair market value of the shares, as determined by an independent third-party valuation.
Shareholder clause with dividend distribution
This version includes provisions for dividend distribution.
The Board of Directors will determine whether dividends will be distributed to shareholders based on the company’s profitability and cash flow. If dividends are declared, they will be distributed proportionally to the shareholders based on the number of shares held.
Shareholder clause with shareholder loan agreements
This version includes shareholder loan agreements.
Shareholders may provide loans to the company as part of a financing arrangement, subject to approval by the Board of Directors. The terms of any shareholder loans will be documented in a formal loan agreement, including interest rates and repayment schedules.
Shareholder clause with dispute resolution for shareholder conflicts
This version includes a dispute resolution process for shareholder conflicts.
In the event of a dispute between shareholders, the parties agree to submit the matter to mediation or arbitration before resorting to legal action. The dispute resolution process will be conducted in [City, State] under the rules of [Arbitration Organization].
Shareholder clause with changes to share class rights
This version includes changes to share class rights.
The rights attached to any class of shares may be amended with the approval of shareholders holding at least [X]% of the shares in that class. Such changes may include adjustments to voting rights, dividend preferences, or liquidation preferences.
Shareholder clause with rights during liquidation
This version includes shareholder rights during liquidation.
In the event of liquidation or dissolution, shareholders will be entitled to receive their pro-rata share of any remaining assets after all liabilities have been paid. Shareholders in each class of shares will receive their distribution in accordance with their class rights as set forth in the articles of incorporation.
Shareholder clause with shareholder exit provisions
This version includes exit provisions for shareholders.
Shareholders may exit the company by selling or transferring their shares according to the terms of the shareholder agreement. The company and remaining shareholders will have the right of first refusal to purchase the shares on the same terms and conditions as those offered by a third party.
Shareholder clause with shareholder voting agreement
This version includes a voting agreement among shareholders.
Shareholders may enter into a voting agreement to collectively vote in a manner that aligns with their mutual interests. The terms of the voting agreement must be disclosed to all shareholders and approved by the Board of Directors.
Shareholder clause with share repurchase rights
This version includes rights for share repurchase by the company.
The company reserves the right to repurchase shares from any shareholder at any time, provided that the terms of the repurchase are fair and reasonable. The repurchase price will be based on the current fair market value of the shares.
Shareholder clause with restrictions on transfer to competitors
This version includes restrictions on transferring shares to competitors.
Shareholders may not transfer or sell their shares to any competitor of the company without the prior written consent of the Board of Directors. This restriction is designed to protect the company’s competitive interests and confidential information.
Shareholder clause with rights to call for an audit
This version includes the right for shareholders to call for an audit.
Shareholders holding at least [X]% of the company’s shares have the right to request an independent audit of the company’s financial records. The request must be submitted in writing to the Board of Directors, and the audit will be conducted at the company’s expense.
Shareholder clause with shareholder information rights
This version includes information rights for shareholders.
Shareholders have the right to receive regular updates on the company’s financial performance, operations, and strategy. This includes access to annual financial statements, quarterly reports, and any other material information that may affect the shareholder’s interests.
Shareholder clause with restrictions on issuing additional shares
This version includes restrictions on issuing additional shares.
The company may not issue additional shares or equity securities that would dilute existing shareholders without their consent, except in certain circumstances such as a capital raise or a strategic acquisition. Any such issuance must be approved by a vote of shareholders holding at least [X]% of the outstanding shares.
Shareholder clause with shareholder agreement amendments
This version includes provisions for amending the shareholder agreement.
Any amendments to the shareholder agreement must be approved by shareholders holding at least [X]% of the outstanding shares. The proposed amendments will be reviewed and voted upon at a meeting of the shareholders.
Shareholder clause with forced buyback option
This version includes a forced buyback option for shares.
In certain circumstances, including but not limited to the departure of a shareholder from the company, the company may exercise a right of first refusal to buy back the departing shareholder’s shares at fair market value.
Shareholder clause with shareholder buyout rights upon default
This version includes buyout rights in case of shareholder default.
If a shareholder defaults on any obligations under the shareholder agreement, the remaining shareholders or the company may exercise the right to buy out the defaulting shareholder’s shares at a fair market value, as determined by an independent third-party appraiser.
Shareholder clause with exit strategy for shareholders
This version includes an exit strategy for shareholders.
The company will develop an exit strategy that outlines potential pathways for shareholders to sell or transfer their shares, including a public offering, merger, or sale to a third party. The company will ensure that the exit strategy aligns with shareholder interests.
Shareholder clause with no vote on routine corporate matters
This version limits voting rights on routine corporate matters.
Shareholders will not be entitled to vote on routine corporate matters, such as the election of officers or approval of standard operational decisions, unless specified otherwise in the company’s governing documents. Routine matters will be decided by the Board of Directors.
Shareholder clause with shareholding reporting obligations
This version includes reporting obligations for shareholders.
Shareholders are required to report any change in their shareholding, including purchases or sales of shares that result in a change of ownership percentage, within [X] days of the transaction. The company will maintain an updated shareholder register based on these reports.
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.