shareholders' agreement

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shareholders' agreement

n. an employment agreement among the shareholders of a small corporation permitting a shareholder to take a management position with the corporation without any claim of conflict of interest or self-dealing against the shareholder/manager. Such agreements are common when there are only three or four shareholders.

References in periodicals archive ?
In conjunction with the merger agreement, CIR also entered into shareholder agreements with deferred effect with FCA and Ital Press relative to their respective future shareholdings in GELE.
Shareholder Agreements and Joint Ventures in China" deals with the legal framework and structuring of a joint venture in China, with information on both the more traditional kinds of joint ventures and the more recent use of shareholder agreements when acquiring shares in an existing company.
LAVALLE, Drafting shareholder agreements for the closely-held business, 4 DePaul Bus.
As soon as the corporation realized the problem, it (1) recharacterized distributions in excess of a shareholder's rightful amount as loans between the corporation and the shareholder; (2) amended the current shareholder agreements to mandate that the purchase price for shares equal their fair market value (FMV); and (3) required that all distributions to shareholders be proportionate to stock ownership.
But these valuations discount the price heavily because 1) there is not a large market for the small holdings of individual shareholders without a controlling interest, 2) the regulations surrounding ownership qualifications of Sub S companies, and 3) due to restrictions imposed by shareholder agreements, since each Sub S company has its own shareholder agreement.
Properly structured, bona-fide shareholder agreements (with buy--sell provisions) between family members establish a value for a family business on an owner's death; this value should be upheld for estate tax valuation purposes.
The court found that the shareholder agreements preserving control by the family did not severely restrict marketability, and that an above-average to average marketability discount was related to the expense involved with a public offering.