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The Silent Shareholder Agreement is a crucial document for businesses in South Africa seeking passive investment while maintaining operational control. This agreement is typically used when a company wants to raise capital without diluting management control, or when an investor wishes to make a financial investment without taking on management responsibilities or public association with the business. The document, governed by South African law including the Companies Act 71 of 2008, establishes the silent shareholder's rights to profits and information while explicitly limiting their involvement in company management. It's particularly valuable for family businesses, startups seeking private investment, or companies requiring discrete capital injection. The agreement includes comprehensive provisions for investment terms, profit sharing, confidentiality, and exit mechanisms, while ensuring compliance with South African corporate governance requirements and tax regulations.

1. Parties: Identification of the company, existing shareholders, and the silent shareholder

2. Background: Context of the agreement, including company status and purpose of silent shareholder investment

3. Definitions: Key terms used throughout the agreement, including 'Silent Shareholder', 'Profits', 'Investment Amount'

4. Investment Terms: Details of the silent shareholder's investment amount, payment terms, and any conditions precedent

5. Profit Sharing: Framework for calculating and distributing profits to the silent shareholder

6. Non-Participation in Management: Clear stipulation that the silent shareholder has no management rights or responsibilities

7. Information Rights: Silent shareholder's rights to receive financial information and company reports

8. Confidentiality: Obligations regarding the confidentiality of the silent shareholder's identity and agreement terms

9. Transfer Restrictions: Limitations on transferring the silent shareholder's interest and any applicable right of first refusal

10. Term and Termination: Duration of the agreement and circumstances for termination

11. Exit Provisions: Mechanisms for the silent shareholder to exit the investment

12. Dispute Resolution: Procedures for resolving disputes between parties

13. General Provisions: Standard clauses including notices, amendments, governing law, and jurisdiction