Document background
The Shareholder Buy Sell Agreement is a fundamental document in South African corporate governance that provides a structured framework for managing ownership transitions in private companies. This agreement becomes essential when companies have multiple shareholders and need to establish clear protocols for share transfers, particularly in events such as shareholder death, retirement, incapacity, or voluntary exit. Governed by South African law, particularly the Companies Act 71 of 2008, the agreement helps prevent potential conflicts and ensures business continuity by establishing predetermined terms for share valuation and transfer procedures. It typically includes provisions for funding mechanisms, often through insurance policies, and must comply with local tax regulations and exchange control requirements when foreign shareholders are involved.
