What should be included in different Shares Templates?
Shares templates can be both Stock Purchase Agreements or Shareholders Agreement contracts. These are both different types of agreement that are both necessary to have in place to protect all parties involved. A Shareholder Agreement is a document that defines who shareholders are, how they vote, and how much of a company they own. A Share Purchase Agreement, in comparison, is far more straightforward. It outlines how much a person is buying of a company in a transaction. Shares templates need to include a number of elements to be a legal document that can later be relied upon if needed.
A Shareholders Agreement should include:
- Background, parties and purpose: Defines individual responsibilities as well as the approach to voting, shareowner rights and obligations.
- Share capital and ownership: Delineates how many shares are owned by who plus how much each share is worth. Defines how shares are divided in terms of capital and what a shareholder is allowed to do with their shares.
- General meetings: Determines that shareowners should attend General meetings (by proxy if needed) and what is discussed or decided at General meetings.
- The board: States how the board should be structured and how voting on the board should occur. Details how many board meetings a year should happen and what transpires in the case of personal or material interest with a board member
- Management: Outlines the structure of a management team.
- Significant decisions: Defines what a significant decision is and how they are made.
- Dividends: Details how dividends are both calculated and distributed.
- Transfer of shares: How shares can be transferred, or sold, or bought is detailed extensively in this clause.
- Dead-lock: Outlines what happens in the case of a dead-lock and how it can be resolved.
- Breach: States what should occur if there is any breach by a party of this agreement. How resignations are broached and the implication a resignation has on selling shares.
- Termination: In our Shareholder Agreement, the termination provision states that the agreement is interminable until a party has sold their shares.
- Deaths: What should happen in the unfortunate case of a shareholder death.
- Prohibition of competing business: How instances of competing business should be approached. If a shareholder is found to be involved in a competing business, what should be done to resolve the issue.
- Confidentiality: How shareholders are obliged to keep company sensitive information confidential. However, that information can be discussed if it is publicly known or needs to be disclosed on legal grounds.
- Intellectual property rights: Intellectual property rights are automatically transferred to the company when Parties begin working with or for it.
- Disputes and applicable law: If there is a dispute, how they should be addressed is approached here as well as what country’s law the company should use to govern the resolution.
A Share Purchase Agreement should include all basic terms and conditions (Amendments, Waivers, Delays, Indulgence and Omissions etc). It will not include the share capital or ownership clauses, nor the general meetings, board, management or significant decisions provisions as stated above. However it does include:
- Details on the sale and purchase
- Warranties, undertakings and representations of the seller.
- Warranties, undertakings and representations of the buyer.
- No conflict and no violation clauses.
- No approvals or consents clauses
- Indemnity clause
When should I use Shares Templates?
Shares templates are good to use to ensure a record of any transactions is kept, as well as the rights that a shareholder has and how a company is structured with a shareholder ownership basis. Both types of Shares templates should be used in any instance where two or more individuals are buying shares in a company. The templates can be quickly updated and amended to reflect all corresponding personal data and specific information, but importantly will still set out the terms and conditions to which both sides of the contract are bound.
Why should I use templates for Shares Agreements?
Templates for shares agreements are a quick and convenient tool to use when trying to cement all terms, conditions and responsibilities of which two sides of a contract need to be aware. What is great about templates, in particular, and not just contracts as a whole, is that they are straightforward to amend and use to create a contract from. That’s important as it means that establishing contracts is no longer a laborious task for anyone involved. Instead, the contract can be generated exceptionally quickly, and any work that was then waiting on the contracts to be signed can begin. It is a far more efficient use of everyone’s time.
Where and how should I use Shares Agreement Templates?
Shares Agreement templates should be used in any instance where the ownership structure of a company needs to be defined, or a share purchase transaction recorded. Templates are fantastic starting points for contracts that can be updated and amended as necessary to ensure that legal protection to all parties is provided. It also means that everyone knows their position from the start so that a relationship that is built on trust and respect is able to transpire more easily.
Additionally, our software helps make our Shares templates even more efficient. Generating Shareholders Agreements or Stock Purchase Agreements with our app means that contracts can be drafted, stored, signed, executed and automated all in one place. Storage is a crucial step that some people overlook in terms of importance. Our cloud storage means that there is no need for PDFs or paper contracts. Instead, our dynamic data format means that these documents are always accessible - making them far more an asset than a hard copy contract ever would.