{"id":5836,"date":"2022-12-03T16:29:51","date_gmt":"2022-12-03T16:29:51","guid":{"rendered":"https:\/\/www.isbr.in\/blogs\/?p=5836"},"modified":"2022-12-03T16:44:27","modified_gmt":"2022-12-03T16:44:27","slug":"shareholders-agreement","status":"publish","type":"post","link":"https:\/\/www.isbr.in\/blogs\/shareholders-agreement\/","title":{"rendered":"Shareholder’s Agreement"},"content":{"rendered":"\n

PROFILE OF THE SPEAKER:<\/strong>
Mr. Ravi Shankar Devarkonda, a Chartered Accountant and Company Secretary by profession is a domain expert in the field of finance and secretarial practices. He is the Chief Financial Officer (CFO) of Nandi Infrastructure Corridor Enterprises Ltd, Kalyani Group and is also a registered Valuer as per Insolvency and Bankruptcy Code of India.
ABSTRACT:<\/strong>
A shareholders\u2019 agreement is an agreement among the shareholders of a company. It protects both the business and its shareholders. A shareholders\u2019 agreement describes the rights and obligations of shareholders, issuance of shares, the operation of the business, and the decision-making process. While these part-owners earn profit by investing in a company\u2019s stocks, they also play an important role in operating, financing, governing and controlling various aspects of a business. The Shareholders
Agreement is binding only on the parties to the Agreement, and it is a contractual arrangement between the parties. A properly drafted Shareholders Agreement will help to maintain a healthy relationship between the parties.
FLOW OF EVENTS:
<\/strong>So, the session started with the discussion of various topics concerned like:<\/p>\n\n\n\n

  1. The speaker started by explaining what is share capital, the basic fundamental of a company arrangement and what is a share agreement.<\/li>
  2. Next, he jumped onto Due Diligence(DD) procedure and it types which are: Legal DD, Technical DD and Administrative DD<\/li>
  3. Then comes Pre Negotiation Stage, wherein the first process is
    – Commercials: Commercials are foundation of all commercial contracts and the legal clause only supplements it.
    – Letter of Intent\/ MoU\/ Term sheet
    – Negotiation: The art of arriving at a consensus between two parties.<\/li>
  4. Next comes drafting a Shareholders Agreement (SHA) , Drafting is done keeping in
    mind two clauses – Generic clause and Common clause.<\/li>
  5. The speaker briefed about what are the key consideration area of SHA, that are:
    – Regulatory Framework
    – Commercial Consideration
    – Transfer provision
    – Equity Shareholding pattern
    – Minority rights protection<\/li>
  6. Then he explained the Key Clauses under Shareholding Agreement:
    – Anti Dilution Right
    – Quorum Right
    – Veto Right\/ Affirmative Right
    – Share Transfer restriction Right
    – Tag along Right
    – ROFR (Right of First Refusal)
    – ROFO (Right of First Offer)
    – Drag along Right
    Exit Rights:
    i) IPO
    ii) Third party sale
    iii) Share Buy Back
    iv) Sale of assets and liquidation.<\/li>
  7. Then he explained the concept of Deadlock; Deadlock can occur both at the Board as well as at the shareholder level.<\/li>
  8. Then he talked about Veto Rights and its matters, which are
    – Takeover of new Business
    – IPO
    – Amalgamation, M&A, Reorganisation and consolidation
    – Appointment\/Removal of company auditors.
    – Modification in MOA and AOA
    – Any change in composition of Board of Director<\/li><\/ol>\n\n\n\n
    \n
    \"\"<\/figure>\n\n\n\n
    \"\"<\/figure>\n\n\n\n
    \"\"<\/figure>\n<\/figure>\n\n\n\n

    LEARNINGS FROM THE EVENTS:<\/strong>
    The session was insightful and full of learnings as we were able to understand the fundamentals of share agreement, basics of secretarial practices and company working and got to know a lot about the rights governing minority shareholders
    <\/p>\n\n\n\n

    About ISBR:\u00a0<\/strong>ISBR Business School, Bangalore-based, Top Class B School for PGDM or MBA, Consistently ranked as best B School in India, AICTE-CII Platinum Category, with multiple specializations<\/em><\/p><\/blockquote><\/figure>\n","protected":false},"excerpt":{"rendered":"

    PROFILE OF THE SPEAKER:Mr. Ravi Shankar Devarkonda, a Chartered Accountant and Company Secretary by profession is a domain expert in<\/p>\n","protected":false},"author":1,"featured_media":5841,"comment_status":"closed","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[193],"tags":[2110,2104,2107,1330,2106,2112,2111,2109,2105,2108],"class_list":["post-5836","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-guest-lectures","tag-chief-financial-officer","tag-ipo","tag-issuance-of-shares","tag-mergers-and-acquisitions","tag-moa","tag-mr-ravi-shankar-devarkonda","tag-nandi-infrastructure-corridor-enterprises-ltd","tag-rights-and-obligations-of-shareholders","tag-sha","tag-the-operation-of-the-business"],"yoast_head":"\nShareholder's Agreement - ISBR Blog<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.isbr.in\/blogs\/shareholders-agreement\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Shareholder's Agreement - 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