Hong Kong Shareholder Agreement Template
Basic Structure of a Shareholders' Agreement
A shareholders' agreement is a contract between the shareholders of a company. It outlines the rights, obligations, and responsibilities of each shareholder, and often covers matters such as:
Shareholding structure
Management and control
Dividends and distributions
Share transfer restrictions
Dispute resolution
Confidentiality
Sample Shareholders' Agreement Template
[Company Name] Shareholders' Agreement
This Shareholders' Agreement (the "Agreement") is made as of [Date] by and between:
[Shareholder Name 1], a [legal entity type] with its registered office at [address] (the "Shareholder 1"); and
[Shareholder Name 2], a [legal entity type] with its registered office at [address] (the "Shareholder 2").
Collectively, the Shareholders are referred to as the "Parties".
1. Definitions
In this Agreement, the following terms shall have the following meanings:
Agreement: This Shareholders' Agreement.
Company: [Company Name], a company incorporated in Hong Kong with limited liability.
Shareholder 1: [Shareholder Name 1], a [legal entity type] with its registered office at [address].
Shareholder 2: [Shareholder Name 2], a [legal entity type] with its registered office at [address].
Shares: The ordinary shares in the issued share capital of the Company.
Board: The board of directors of the Company.
Share Capital: The issued share capital of the Company.
Effective Date: The date of this Agreement.
2. Shareholding
2.1. The Company is incorporated in Hong Kong with limited liability and has a share capital of [amount].
2.2. Shareholder 1 holds [number] shares representing [percentage] of the issued share capital of the Company.
2.3. Shareholder 2 holds [number] shares representing [percentage] of the issued share capital of the Company.
3. Management and Control
[Outline the structure of the board of directors, decision-making processes, and any management control provisions]
3.1 Board of Directors
3.1.1 The initial Board of Directors of the Company shall consist of [number] directors, with [number] director(s) appointed by Shareholder 1 and [number] director(s) appointed by Shareholder 2.
3.1.2 The Board shall have the authority to appoint and remove directors in accordance with the Companies Ordinance (Cap. 622) of the Laws of Hong Kong.
3.1.3 Term of Office, Resignation, and Removal of Directors
3.1.3.1 The initial directors appointed by each Shareholder shall hold office for a term of [number] years from the Effective Date.
3.1.3.2 Subsequent directors shall be appointed for a term of [number] years, unless otherwise determined by the Board.
3.1.3.3 A director may resign from office at any time by giving [number] days’ written notice to the Board.
3.1.3.4 A director may be removed from office by a resolution of the shareholders passed at a general meeting of the Company.
3.1.3.5 The removal of a director appointed by a Shareholder shall not affect the right of that Shareholder to appoint a replacement director.
3.2 Decision Making
3.2.1 The Board shall manage the business and affairs of the Company.
3.2.2 Decisions of the Board shall be made by a simple majority of the directors present at a meeting, provided a quorum of [number] directors is present.
3.2.3 Special Resolutions, Shareholder Approval, and Voting Rights
3.2.3.1 Special Resolutions: Certain matters, including but not limited to, [list of matters, e.g., amendment of the Company’s articles of association, winding up of the Company, sale of the Company’s undertaking], shall require the approval of a special resolution, which means a resolution passed by a majority of not less than [percentage] of the votes cast by the shareholders entitled to vote and present at a general meeting.
3.2.3.2 Shareholder Approval: In addition to the requirements of the Companies Ordinance, the following matters shall require the prior written approval of [specify percentage] of the shareholders: [list of matters, e.g., issuance of new shares, incurring indebtedness exceeding a specified amount, entering into material contracts].
3.2.3.3 Voting Rights: Each shareholder shall be entitled to one vote for each share held. Shareholders may appoint proxies to attend and vote at general meetings.
3.3 Management Control
3.3.1 [Shareholder 1/Shareholder 2] shall have the right to appoint the [position] of the Company.
3.3.2 Major corporate actions, including but not limited to, [list of major corporate actions], shall require the approval of [specify percentage] of the shareholders.
[Here are some common examples:
Capital Structure Changes
Issuance of new shares
Share buybacks
Stock splits or reverse splits
Dividends
Mergers and Acquisitions
Mergers
Acquisitions
Divestitures
Spin-offs
Corporate Governance Changes
Amendments to the articles of association
Changes in the board of directors
Executive compensation plans
Financing Decisions
Issuance of debt securities
Guarantee or collateralization of obligations
Other Significant Transactions
Sale or purchase of significant assets
Joint ventures or strategic alliances]
3.3.3 Other Management Control Provisions
3.3.3.1 Veto Rights:
[Shareholder 1/Shareholder 2] shall have a veto right over [specify decisions or actions, e.g., entering into material contracts exceeding a certain value, incurring debt above a certain threshold].
The exercise of a veto right shall require [specify notice period and form] of written notice to the other Shareholder.
3.3.3.2 Consent Requirements:
The consent of [specify percentage] of the shareholders shall be required for [specify decisions or actions, e.g., amending the Company’s articles of association, changing the Company’s registered office].
Consent shall be obtained in writing prior to the relevant decision or action being taken.
3.3.3.3 Information Rights:
Each Shareholder shall have the right to inspect the Company’s books and records during normal business hours upon reasonable notice.
The Company shall provide each Shareholder with financial statements and other relevant information at least [specify frequency].
4. Dividends and Distributions
4.1 Distribution of Profits:
4.1.1 The Company shall distribute its net profits, after providing for reserves and other appropriate provisions, in accordance with the following: [Percentage]% of the net profits shall be distributed to Shareholder 1. [Percentage]% of the net profits shall be distributed to Shareholder 2.
4.2 Dividend Policy:
4.2.1 The Board shall have the discretion to determine the amount and timing of dividend distributions, subject to the provisions of this Agreement and applicable laws.
4.2.2 Dividends shall be distributed in proportion to the shareholding of each Shareholder.
4.3 Restrictions on Distributions:
4.3.1 No distribution shall be made if the Company is insolvent or if such distribution would render the Company insolvent.
4.3.2 The Board may retain profits for the purpose of working capital, development, or other corporate purposes.
5. Share Transfer Restrictions
5.1 General Restrictions:
5.1.1 No Shareholder may transfer any Shares without the prior written consent of the other Shareholders.
5.2 Right of First Refusal:
5.2.1 If a Shareholder desires to transfer any Shares, they must first offer such Shares to the other Shareholders on the same terms and conditions as offered to any third party (the "Offer").
5.2.2 The other Shareholders shall have a period of [number] days to accept the Offer.
5.2.3 If the other Shareholders do not exercise their right to purchase the Shares within the specified period, the Shareholder may transfer the Shares to a third party.
5.3 Buy-Back Option:
5.3.1 The Company shall have the right to purchase any Shares offered for sale by a Shareholder at a fair market value determined by [method of valuation].
5.3.2 The Company shall exercise its buy-back option within [number] days of receiving notice of the offer to sell.
5.4 Prohibited Transfers:
5.4.1 Shares may not be transferred to any competitor of the Company.
5.4.2 Shares may not be pledged or used as security for any debt.
6. Dispute Resolution
6.1 Negotiation: The Parties shall use their best efforts to resolve any dispute arising out of or in connection with this Agreement through amicable negotiation.
6.2 Mediation: If the dispute cannot be resolved through negotiation within [number] days of its occurrence, the Parties shall submit the dispute to mediation in accordance with the rules of [mediation institution, e.g., Hong Kong International Arbitration Centre (HKIAC)]. The mediator shall be appointed jointly by the Parties.
6.3 Arbitration: If the dispute remains unresolved after mediation, it shall be finally settled by arbitration in accordance with the Arbitration Rules of the [arbitration institution, e.g., HKIAC]. The arbitration shall be conducted in [city, country] and the language of the arbitration shall be [language]. The number of arbitrators shall be [number].
6.4 Governing Law: This Agreement shall be governed by and construed in accordance with the laws of Hong Kong.
7. Confidentiality
7.1 Confidential Information:
7.1.1 "Confidential Information" means any information, whether oral, written, or electronic, disclosed by one Party to the other Party in connection with this Agreement, including, but not limited to, financial information, business plans, customer lists, trade secrets, and know-how.
7.2 Obligation of Confidentiality:
7.2.1 Each Shareholder agrees to hold in strict confidence all Confidential Information received from the other Shareholder.
7.2.2 Confidential Information shall not be disclosed to any third party without the prior written consent of the disclosing Party.
7.2.3 Each Shareholder shall use its best efforts to protect the confidentiality of the Confidential Information.
7.3 Exceptions:
7.3.1 Confidential Information may be disclosed if required by law or court order.
7.3.2 Confidential Information may be disclosed to employees, contractors, or advisors of the receiving Party who have a need to know and who are bound by confidentiality obligations.
7.4 Survival:
7.4.1 The obligations of confidentiality shall survive the termination of this Agreement.
8. Termination
8.1 Termination by Mutual Agreement: This Agreement may be terminated at any time by mutual written consent of the Shareholders.
8.2 Termination for Cause: Either Shareholder may terminate this Agreement with immediate effect upon written notice to the other Shareholder if the other Shareholder: Commits a material breach of this Agreement that is not cured within [number] days of written notice; or Becomes insolvent or bankrupt.
8.3 Termination Upon Winding Up: This Agreement shall automatically terminate upon the winding up or dissolution of the Company.
8.4 Survival of Provisions: Upon termination of this Agreement, the following provisions shall survive: [specify provisions, e.g., confidentiality, dispute resolution, indemnification].
9. Entire Agreement
9.1 This Agreement constitutes the entire agreement between the Parties and supersedes all prior or contemporaneous communications, representations, or agreements, whether oral or written, relating to the subject matter hereof.
10. Governing Law
10.1 This Agreement shall be governed by and construed in accordance with the laws of Hong Kong.
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date first written above.
[Signature of Shareholder 1]
[Signature of Shareholder 2]
Additional Considerations
Consider including provisions for valuation of shares, buy-sell agreements, and deadlock resolution.
Address intellectual property rights and ownership.
Include provisions for shareholder meetings and voting rights.
Consider indemnification clauses to protect shareholders from liabilities.
Again, this is a basic template and may not cover all potential issues. It's essential to seek professional advice to tailor the agreement to your specific circumstances.
How Bestar Can Help
Hong Kong Shareholder Agreement Template
Bestar can provide invaluable assistance in various aspects of business and personal life. Here are some key areas where their expertise can be beneficial:
Company Formation: Assisting with incorporation, registration, and licensing.
Shareholders' Agreements: Drafting, reviewing, and negotiating these crucial contracts.
Commercial Contracts: Preparing, reviewing, and negotiating contracts for various business transactions.
Intellectual Property Protection: Registering trademarks, patents, and copyrights.
Employment Law: Advising on hiring, termination, and labor disputes.
Tax and Compliance: Ensuring compliance with tax regulations and providing tax planning advice.
Mergers and Acquisitions: Handling complex legal issues during business combinations.
Work Visas: Assisting with obtaining work permits and visas for foreign employees.
Investment Visas: Advising on investment immigration programs.
Family Reunification: Helping families immigrate to Hong Kong.
Wills and Estate Planning: Drafting wills and estate plans to protect assets.
Regulatory Compliance: Ensuring compliance with industry-specific regulations.
In essence, Bestar can provide expert guidance and support to individuals and businesses operating in Hong Kong, helping to mitigate risks and achieve their goals.
Comments