A Shareholders Agreement has great significance when you agree to set up a joint venture company or partnership. It gives a supervening set of rights and obligations and is mostly used to avert future misunderstandings and issues in running the business. In fact, it can be used to say how a business will be managed, how disagreements will be settled, what will happen on the death of a shareholder, and to avoid shareholders from competing with the corporation. It may be exploited to transfer the power to manage a corporation from the directors to the shareholders, depending on your jurisdiction. There are various reasons to have this, especially there are relatively fewer shareholders of your corporation and most or all of them work for the company. So, making a shareholders agreement gives you double benefits.
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