Because of their nature, shareholder agreements perform a wide range of functions. Some of the most important functions that concern many shareholder agreements are: a company is not required to have a shareholders` pact, but because of the flexibility of this document and what it may include, it is in the interest of shareholders to legalize such an agreement in order to protect their rights and the success of the company. Depending on the statutes and statutes is a cumbersome method of managing a modern company. Someone who is considered the majority shareholder of a company owns 50% or more of the shares. As a general rule, the majority shareholder is the founder of the company or, if a company has been handed over by inheritance, the descendant of the founder. By holding so many shares, the majority shareholder also has voting rights in relation to the percentage of shares. This means that he or she has a significant influence on how the company is run and the direction it needs to take. Many majority shareholders hand over the company`s management positions to executives and executives because they want a hands-off approach. Sometimes majority shareholders decide to give up their role in the company and try to sell their shares to their competitors. Often, a majority shareholder in a small group also plays the role of CEO.
In large companies, which are worth up to billions of dollars, investors could include institutions that own a considerable number of shares. However, this flexibility can lead to conflicts between a shareholder contract and a company`s constitutional documents. Although laws vary from country to country, most conflicts are generally resolved as follows: for certain types of shareholders, such as. B private equity investors, a certain veto may be advantageous. Veto rights can be created by shareholder agreement for certain measures. Some of the veto measures may include amending the statutes, approving the budget, borrowing, issuing shares and replacing the CEO. The agreement contains sections that set out the fair and legitimate pricing of shares (especially during the sale).