The Shareholders Agreement And Share Subscription Agreement is a fundamental document in South African corporate law, typically used when a company is seeking new investment while simultaneously establishing the framework for shareholder relationships. It's particularly relevant for private companies raising capital, whether through venture capital, private equity, or strategic investors. The document serves dual purposes: facilitating the initial investment through detailed subscription terms while also defining the long-term governance structure and shareholder rights. This agreement type is governed by South African law, primarily the Companies Act 71 of 2008, and includes essential provisions for share issuance, voting rights, board representation, pre-emptive rights, transfer restrictions, and exit mechanisms. It's commonly used in funding rounds, strategic partnerships, and corporate restructuring situations where new shareholders are entering the company.
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1. Parties: Identification of all parties to the agreement including the Company, existing shareholders, and new subscribers
2. Background: Context of the transaction, current company structure, and purpose of the agreement
3. Definitions and Interpretation: Definitions of key terms and interpretation rules for the agreement
4. Subscription for Shares: Details of share subscription including number, class, price, and payment terms
5. Conditions Precedent: Conditions that must be met before the subscription becomes effective
6. Completion: Mechanics and timing of the subscription completion
7. Warranties and Representations: Warranties given by the company, existing shareholders, and subscribers
8. Share Capital and Further Issues: Structure of share capital and process for future share issues
9. Transfer of Shares: Restrictions and procedures for transferring shares
10. Pre-emptive Rights: Rights of first refusal on share transfers and new issues
11. Management and Decision Making: Governance structure, board composition, and decision-making processes
12. Shareholders Meetings: Procedures for shareholder meetings and voting rights
13. Reserved Matters: Decisions requiring special majority or unanimous consent
14. Dividend Policy: Framework for declaring and paying dividends
15. Deadlock: Procedures for resolving deadlock situations
16. Confidentiality: Obligations regarding confidential information
17. Breach and Termination: Consequences of breach and termination provisions
18. General Provisions: Standard boilerplate clauses including notices, governing law, etc.
1. Tag-Along Rights: Used when minority shareholders need protection to sell their shares alongside majority shareholders
2. Drag-Along Rights: Included when majority shareholders want the right to force minorities to join in a sale
3. Put and Call Options: Required when parties want specific rights to buy or sell shares at predetermined terms
4. Anti-dilution Protection: Included to protect investors from dilution in future funding rounds
5. Employee Share Scheme: Needed when the company plans to implement employee share ownership
6. Intellectual Property Rights: Important for technology companies or where IP is a significant asset
7. Non-compete Provisions: Used when shareholders need to be restricted from competing activities
8. Good Leaver/Bad Leaver: Required when shareholders are also employees/executives
9. External Financing: Included when the company anticipates seeking additional funding
1. Share Capital Structure: Details of all share classes, rights, and current ownership
2. Subscription Details: Specific details of share subscription including payment terms
3. Company Information: Key company details, registrations, and corporate information
4. Warranties: Detailed warranties given by various parties
5. Reserved Matters List: Comprehensive list of matters requiring special approval
6. Board Procedures: Detailed procedures for board meetings and governance
7. Deed of Adherence: Template for new shareholders to join the agreement
8. Valuation Methodology: Agreed methods for share valuation in various scenarios
9. Key Performance Indicators: Metrics for measuring company performance if linked to rights
Relevant legal definitions
Clauses
Relevant Industries
Technology
Manufacturing
Financial Services
Real Estate
Healthcare
Retail
Professional Services
Energy
Mining
Agriculture
Telecommunications
Education
Construction
Transportation
Media and Entertainment
Relevant Teams
Legal
Corporate Finance
Executive Leadership
Board of Directors
Investment
Compliance
Risk Management
Corporate Secretariat
Strategy
Mergers & Acquisitions
Relevant Roles
Chief Executive Officer
Chief Financial Officer
Company Secretary
Legal Counsel
Corporate Lawyer
Investment Manager
Private Equity Manager
Venture Capital Manager
Board Director
Company Director
Corporate Finance Manager
Mergers & Acquisitions Manager
Investment Banker
Financial Director
Compliance Officer
Risk Manager
Business Development Manager
Strategy Director
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