that the shareholder may appoint himself only) or if he may designate another party in his place. It is also necessary to examine whether the right to appoint a director can be used for a person who acquires the shares of the original shareholder. The answers to these questions are ultimately dictated by the facts of each situation. It is important that an experienced lawyer advises you on your company`s articles of association so that they are correct the first time. This is explained by the fact that a shareholder decision of more than 75% of the shareholders is necessary to adopt a statute, so companies are rarely interested in amending the articles of association more than necessary. A shareholders` agreement is a private contract between the shareholders of a company that defines the rights and obligations of the parties towards the company. Unlike the articles, it is neither a mandatory nor a public document. There are no mandatory provisions – it can contain, to the extent reasonable, whatever the parties want from it. As I explained above, most standard by-articles of association confer significant management powers on the board of directors and, ultimately, the board of directors is controlled by one or more shareholders. Since the Companies Acts provide for fairly limited rights for minority shareholders, it is quite common in a shareholders` agreement, where there is a majority/minority situation or where there are a number of minorities, to impose certain restrictions on the powers of directors without the consent of certain shareholders or a certain percentage of shareholders.
Among the issues that would normally be so restricted are: the articles of association can be amended by a special decision, which is a decision taken by 75% or more of the shareholders present and voting at a general meeting. While everything is often harmonious between shareholders when you start your stake in a company, it can often happen that unexpected events lead to disagreements between the parties….