Kagaznama

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Shareholders' Agreement

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  1. The company and its shareholders
  2. The board
  3. Reserved matters
  4. Transfer of shares
  5. Dividends, information, disputes and signing

Step 1 of 5

The company and its shareholders

For example: Northline Analytics Private Limited

For example: U70109CH2022PTC012345

Registered office of the companyNeeded

An amount in rupees. Commas and a ₹ sign are both fine — write it the way you would write it anywhere else, and the document is given the tidy form of it.

For example: 10

An amount in rupees. Commas and a ₹ sign are both fine — write it the way you would write it anywhere else, and the document is given the tidy form of it.

For example: 10,00,000

For example: Rohit Nair

First Shareholder — addressNeeded

For example: AAECN5678L

A plain number. Digits only — no words and no units beside them.

For example: 5000

A plain number. Digits only — no words and no units beside them.

For example: 50

For example: Kavita Bansal

Second Shareholder — addressNeeded

For example: AFRPB2212K

A plain number. Digits only — no words and no units beside them.

For example: 5000

A plain number. Digits only — no words and no units beside them.

For example: 50

More details — you may leave these

Leave blank if there are only two Shareholders.

A long answer. Several lines are fine, and a break you make between paragraphs is the break the document keeps.

For example: Meridian Ventures Fund I LLP, Unit 305, Tower B, Bestech Business Tower, Sector 66, S.A.S. Nagar (Mohali), PAN AAJFM1122P, 2500 shares, 20%

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SHAREHOLDERS' AGREEMENT

BETWEEN

  1. 1. __________, of __________, PAN __________, holding __________ equity shares (__________%) ("First Shareholder");
  1. 2. __________, of __________, PAN __________, holding __________ equity shares (__________%) ("Second Shareholder");

together the "Shareholders", each a "Shareholder", in relation to

__________, CIN __________, having its registered office at __________ (the "Company"), each equity share having a face value of __________ and the total paid-up equity share capital of the Company being __________.

RECITALS

A. The Shareholders together hold the whole, or substantially the whole, of the paid-up equity share capital of the Company.

B. The Shareholders wish to record how the Company is governed and how its shares may be dealt with, alongside its Memorandum and Articles of Association.

NOW THIS AGREEMENT WITNESSES AS FOLLOWS.

  1. 1. SHAREHOLDING

1.1 The Shareholders' holding in the Company is as stated in the parties clause above and, for any additional Shareholders, in the Schedule to this Agreement.

  1. 2. RELATIONSHIP WITH THE ARTICLES OF ASSOCIATION

2.1 This Agreement is additional to, and does not by itself amend, the Memorandum and Articles of Association of the Company. Where this Agreement requires a particular provision to bind the Company or a person who is not a party to it, the Shareholders shall procure that the Articles of Association are amended by special resolution, and filed with the Registrar of Companies, to the extent needed to give that provision effect.

  1. 3. THE BOARD
  1. 4. GENERAL MEETINGS

4.1 The Shareholders shall exercise their votes in general meeting consistently with this Agreement, and in particular shall not vote in favour of a resolution on a reserved matter listed in clause 6 unless the consent required by that clause has first been obtained.

  1. 5. WHAT THE BOARD MAY DECIDE IN THE ORDINARY COURSE

5.1 Subject to clause 6, the Board may manage the business and affairs of the Company by a simple majority of the directors present and voting at a duly convened meeting, consistently with the Articles of Association and the Companies Act, 2013.

  1. 6. RESERVED MATTERS

(a) amendment of the Memorandum or Articles of Association;

(b) alteration of the authorised or issued share capital, or the creation or issue of any new class or series of shares, options or convertible securities;

(e) a related-party transaction within the meaning of section 188 of the Companies Act, 2013;

(f) a change in the core business of the Company, or the commencement of a materially different business;

(g) a merger, demerger, acquisition, or sale, lease or disposal of the whole or substantially the whole of the undertaking of the Company;

(h) commencement of winding up or insolvency proceedings by the Company;

(i) appointment or removal of the statutory auditor otherwise than as recommended in the ordinary course, or appointment or removal of the chief executive or chief financial officer;

(j) declaration of dividend otherwise than consistently with clause 12; and

(k) any amendment of this Agreement.

  1. 7. TRANSFER RESTRICTIONS — LOCK-IN
  1. 8. RIGHT OF FIRST REFUSAL
  1. 9. TAG-ALONG RIGHT
  1. 10. DRAG-ALONG RIGHT

10.3 The company shall not register a transfer of shares made in breach of clauses 7, 8, 9 or 10, and the Shareholders shall procure that the Articles of Association authorise the Board to refuse registration of such a transfer.

  1. 11. NON-COMPETE AND CONFIDENTIALITY

11.1 While a Shareholder holds shares in the Company, that Shareholder shall not, without the consent required under clause 6, engage in a business directly competing with the Company's business. This clause 11.1 does not, by itself, restrain a Shareholder after that Shareholder ceases to hold shares — section 27 of the Indian Contract Act, 1872 voids a broad restraint of that kind in India save in narrow, specific circumstances, and this Agreement does not attempt to draft one here.

  1. 12. DIVIDEND POLICY
  1. 13. INFORMATION RIGHTS
  1. 14. DEADLOCK

14.1 If a reserved matter under clause 6 cannot obtain the consent required, the Shareholders shall first attempt to resolve the disagreement in good faith within thirty days, failing which either side may refer it to mediation before a mediator agreed between them, and failing resolution within a further thirty days, it shall be referred to arbitration under clause 17.

  1. 15. NEW SHAREHOLDERS

15.1 A person who is allotted or who acquires shares in the Company after the date of this Agreement, whether under clause 6(b), a permitted transfer, or otherwise, shall not be bound by, or entitled to the benefit of, this Agreement unless that person executes a deed of accession agreeing to be bound by it as if an original Shareholder, and the existing Shareholders shall procure that no such allotment or transfer (other than one required by law) is registered without that deed of accession first being executed.

  1. 16. IF THIS AGREEMENT AND THE ARTICLES CONFLICT

16.1 As between the Shareholders, this Agreement prevails over the Articles of Association to the extent they conflict, and the Shareholders shall vote and act, so far as they lawfully can, to bring the Articles into conformity with this Agreement. As against the Company and third parties, the Articles of Association prevail unless and until so amended, consistently with the general law on a company's constitutional documents.

  1. 17. DISPUTE RESOLUTION AND GOVERNING LAW
  1. 18. STAMP DUTY
  1. 19. GENERAL

19.1 This Agreement is the entire agreement between the Shareholders about its subject matter and supersedes all prior discussion, whether oral or in writing, including a Founders' Agreement, if any, to the extent it covers the same ground — the Shareholders shall state expressly which of that earlier agreement's clauses, if any, continue in effect alongside this one.

19.2 No amendment is effective unless made in writing by the consent required under clause 6(k).

19.3 If any provision is held invalid or unenforceable, the rest of this Agreement continues in effect.

SIGNED by the FIRST SHAREHOLDER
__________

Signature: ______________________________

SIGNED by the SECOND SHAREHOLDER
__________

Signature: ______________________________

SCHEDULE — SHAREHOLDING AND RIGHT-OF-FIRST-REFUSAL MECHANISM

Company: __________, __________

Right-of-first-refusal mechanism: a Shareholder wishing to transfer shares to an outside buyer gives written notice to the other Shareholders stating the number of shares, the price and the material terms offered by the outside buyer; the other Shareholders may accept that offer, in whole or in part, pro rata to their existing shareholding (and, to the extent any Shareholder does not take up the full pro rata entitlement, the remaining Shareholders may take up the balance among themselves, pro rata to their own holdings), within the period fixed in clause 8; shares not taken up may then be sold to the outside buyer strictly on the terms offered, within ninety days, failing which the shares must be re-offered under this mechanism before any further attempt to sell them.

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