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Small Business Shareholder Agreement
"I need a Small Business Shareholder Agreement for my tech startup in Bangalore with three co-founders, where we want to include specific provisions for future funding rounds and employee stock options, plus protection for our intellectual property rights."
1. Parties: Identification of all shareholders and the company, including their full legal names, addresses, and registration details
2. Background: Context of the agreement, including company formation details and purpose of the shareholder agreement
3. Definitions: Definitions of key terms used throughout the agreement
4. Share Capital and Shareholding: Details of authorized and issued share capital, classes of shares, and current shareholding pattern
5. Share Transfer Restrictions: Right of first refusal, tag-along rights, drag-along rights, and process for share transfers
6. Corporate Governance: Board composition, appointment of directors, voting rights, and meeting procedures
7. Shareholder Meetings: Procedures for conducting shareholder meetings, voting rights, and quorum requirements
8. Reserved Matters: List of decisions requiring special majority or unanimous consent
9. Dividend Policy: Framework for declaration and distribution of dividends
10. Confidentiality: Obligations regarding confidential information and trade secrets
11. Dispute Resolution: Mechanism for resolving disputes between shareholders
12. Term and Termination: Duration of the agreement and circumstances for termination
13. General Provisions: Standard clauses including notices, amendments, governing law, and jurisdiction
1. Tag-Along and Drag-Along Rights: Detailed section on exit mechanisms, recommended when there are multiple shareholders with varying ownership percentages
2. Anti-Dilution Protection: Protection against share dilution, important when future funding rounds are anticipated
3. Non-Compete and Non-Solicitation: Restrictions on competitive activities, relevant when shareholders are actively involved in business operations
4. Intellectual Property Rights: IP ownership and protection clauses, essential for technology or brand-focused businesses
5. Employee Share Options: Framework for employee stock options, relevant if the company plans to offer equity to employees
6. Dead-Lock Resolution: Specific procedures for resolving management deadlocks, important for companies with equal shareholding
7. Put and Call Options: Rights to force purchase or sale of shares, useful for providing exit mechanisms
8. Foreign Investment Compliance: Additional provisions for compliance with FEMA if foreign shareholders are involved
1. Schedule 1: Details of Shareholders: Complete list of shareholders with their shareholding details, contact information, and nominee details
2. Schedule 2: Share Capital Structure: Detailed breakdown of share classes, rights attached to shares, and shareholding pattern
3. Schedule 3: Reserved Matters List: Comprehensive list of decisions requiring special approval
4. Schedule 4: Board Composition: Details of current board members and rules for board composition
5. Schedule 5: Business Plan: Initial business plan and key business objectives
6. Schedule 6: Tag and Drag Along Procedures: Detailed procedures for implementing tag-along and drag-along rights
7. Appendix A: Share Transfer Notice Template: Standard form for notifying share transfers
8. Appendix B: Board Resolution Templates: Standard templates for common board resolutions
Authors
Technology
Manufacturing
Retail
Professional Services
Healthcare
Food & Beverage
E-commerce
Education
Real Estate
Construction
Consulting
Digital Services
Family Business
Trading
Small Scale Industries
Legal
Corporate Secretarial
Finance
Compliance
Board of Directors
Corporate Governance
Executive Leadership
Investment
Risk Management
Business Development
CEO
Managing Director
Company Secretary
Legal Counsel
Chief Financial Officer
Business Owner
Founder
Director
Compliance Officer
Corporate Lawyer
Investment Manager
Board Member
Finance Director
General Counsel
Business Development Manager
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