Home “Business and Corporate Law” Could shareholders inadvertently terminate their shareholder contract? A shareholder pact should essentially be the cornerstone of any business project between founders and partners. The agreement should determine the rights and interests and obligations of the contracting parties that sign it. As a general rule, a shareholders` pact should contain clauses such as these: even if it is not required by law to have a shareholders` pact, it is strongly recommended to do so, as it protects shareholders from possible conflicts. What a shareholder contract should normally include: Second, the shareholder contract can be terminated automatically if a party of the partners has found a breach of contract. In this case, the shareholder contract is terminated, unless there are clauses in the agreement that defines some form of mediation. Under Section 15 (7) of the Companies Act 71 of 2008 (“Companies Act”), a company`s shareholders are entitled to enter into an agreement on each matter, provided that it complies with the Corporations Act and the company`s constitution memorandum and that any provision of such an agreement inconsistent with the company`s law or the company`s founding memorandum is not inconsistent. In 2015, five shareholders of a company went to the High Court of South Gauteng to declare that a February 2002 shareholder contract (“shareholders` pact”) was fully effective and that the shareholders` pact, not the company`s founding agreement (MOI) adopted in April 2012, set the shareholder relationship and set a precedent. , inter se and the company. This example shows that it is important to get a shareholder pact in order to create the right foundation for your business. People often do business with friends and family. But it may be better to establish a co-founder relationship with someone you don`t know at all.
Because you will take extra precautions to protect yourself.