12 Apr Shareholders Agreement Case Law
Lucy and Sophie ran a public relations company. They had worked together before in a larger company, and 12 years ago they decided to settle down and become self-employed. At first, it was tight and they put all their money into commissioning the business. They were aware of the shareholder agreements, but they decided not to spend the money on the lawyers. They initially felt that they would be in order and that they would implement a shareholder contract in the second year, as soon as they knew that the transaction would be a success. Shareholders who, in a shareholders` pact that, in certain circumstances, allow a shareholder to withdraw a shareholder`s shares from a drag-along clause, should interpret their obligations according to the usual rules of interpretation of commercial agreements. The reason for the organization of the shareholders` pact is to grant a comprehensive remedy to the shareholder to enforce his rights, which are not mentioned in the statutes of a company, set out in the agreement. In order to enforce the terms of the agreement, the terms of the agreement must be set in the statutes of a company. In Premier Hockey Development Private Limited against Indian Hockey Federation, the Indian Hockey Federation and the petitioning company entered into a shareholder agreement. Tribunal found that the agreement was enforceable against both the shareholders and the company, both of which were parties to and were legally bound to the shareholder contract. Subsequently, the operating company required additional funds from an investor.
The investor has agreed to grant it, but only on the condition that all shares of the subsidiary of the company are transferred to an investor subsidiary for this purpose. In return for the transfer of their shares, the shareholders of the landowner company would be issued with shares of the subsidiary, but did not receive any money. This will be an exchange of shares, because shareholders effectively exchange their shares in one company for shares of another. The fundamental issue that was addressed in this case concerned the dominant position of a company`s association agreement vis-à-vis the shareholders` pact. The Tribunal found that the restrictions on the portability of the shares must be mentioned in the statutes and that in this case it was not mentioned in the articles, but made it unenforceable against the defendant in the shareholder agreement. The court disagreed on all points. It applied the usual legal review used to interpret the text of trade agreements, that is, an objective examination of what a reasonable person, holding all the basic information reasonably available to both parties at the time of the contract, would consider to be the term “formulation”. It refused to apply another review simply because Drag Along`s provisions meant that a shareholder could have his shares withdrawn. It was on this basis that the court decided that one of the other shareholders objected. When a transfer form was signed on his behalf and his shares in the land company registered in the name of the new shareholder, he asked the court to correct the register in order to reinstate his name, the transaction being contrary to the shareholders` pact. He stated that: In order to require remediation under the Companies Act, the terms of the shareholders` pact will often be taken in 2013 in accordance with the statutes of a company or the articles will be amended after the shareholders have concluded the agreement. 3) Issues related to a special liquidation or the granting of veto rights to certain shareholders (more in the case of private equity and venture capital partners), 3) the financial needs of a company, the agreement that is incompatible with the provisions of the law would be considered non-sharp in accordance with Section 6 of the Corporations Act ,2013.