A shareholder contract (Sha) is a contractual agreement between the shareholders of a company and has gained great popularity so that these agreements were specially designed to grant specific rights, impose firm restrictions on the provisions of the Companies Act, 2013 (2013). There are three types of arguments. The first and most common, which represents 50%, is that the agreement is at odds with the articles on the same subject. The second, which represents 37%, is that some issues are dealt with in the agreement, but not in the articles. The question is whether the provisions of the agreement can be applied alongside the articles when the company is already registered and the articles have come into force. In practice, the validity of the agreement must be analysed on a case-by-case basis. The third type is that the articles have specific questions, which the agreement does not have. This species is relatively insignificant and accounts for only 13% of cases. However, the articles in Table A and most of the standard statutes established by business creation agencies, audit firms or law firms do not address many internal regulatory issues that shareholders might consider, by examining the issue more broadly, for the proper functioning of a business. Of course, it is possible to adapt a company`s statutes so that it looks more broadly at these issues.
I have already mentioned that it is more common to have included in the by-law than in a shareholders` pact the pre-emption scheme for the transfer of shares. The reason is that the statutes are a public document and that a potential purchaser of shares of a company would be considered an opinion on the content of the company`s statutes, as submitted to the company`s registrar, whether or not it actually verified them. Therefore, when a person buys shares in a company whose by-law contains a right of sale, that purchaser should seek proof that the procedures provided by the pre-emption statutes have been respected or that the pre-emption rights have been waived with the agreement of the required majority. If, in such circumstances, the potential purchaser acquires shares without obtaining such evidence and if the pre-purchase procedure had not been followed, the purchaser cannot acquire ownership of the action in question, as he would not be a “good-faith buyer for value”. However, if pre-emption procedures are defined in a shareholders` pact, a third-party buyer would not notice such pre-emption rights, as long as they are not included in a public document and would not be affected by the non-compliance with these pre-emption procedures. In order to avoid possible disputes related to the differences between the agreement and the articles, investors are advised to follow the following advice when concluding the agreement and when preparing the articles. Since a company`s statutes will also address these high-level issues, it is customary for a shareholders` pact to include an inconsistency clause providing that it would annul the incorporation of the company in the event of a conflict.