As explained above, the Constitution can be amended by a special decision. On the other hand, a shareholders` agreement, unless it expressly provides for a specific amendment mechanism, may be amended only with the unanimous consent of the parties. Create a shareholders` agreement when you first start the business. Later, circumstances may change. Resentment can build up among shareholders. 1. Personalized shareholder protection 2. Describes the basis for important decisions and limits the power of directors if necessary.3 Protects owners, directors and the corporation from the actions of others.4 Minimizes commercial disputes between owners – clearly explains how decisions are made and ensures dispute resolution 5. Bank financing support – shows stability to potential partners 6.
Prevents changes in a shareholder`s personal circumstances from affecting the company or other shareholders 7. Protects the rights of minority shareholders and the patrimonial value of their shareholding 8. Establishes procedures when a shareholder decides to sell his shares Although the standard articles of notes 1, 7 and 8 of the Act can be adopted, in practice you will find very often: that the creation of a business is designed by a starting-up agent, an accountant or a lawyer who adopts certain parts of these standard constitutions with certain changes / exclusions. If a shareholders` agreement exists, it usually contains a clause that, in the event of a constitutional conflict, the shareholders` agreement prevails to the extent of the inconsistency. The directors of Live Board Holdings Limited (Company) have decided to issue common shares to existing shareholders of the Company and preferred shares to new shareholders. However, arbitration also has its drawbacks. A party to a dispute under a shareholders` agreement may feel that the dispute could be resolved more quickly or effectively by a court, but the other party may insist that the matter be referred to an arbitrator and may obtain a court order suspending the legal proceedings until the arbitration has been conducted. Another disadvantage of arbitration (from one`s own point of view, of course) is that the arbitrator`s decision is usually expressed as binding and cannot be challenged with very limited exceptions, while a decision of the Circuit Court or the High Court can usually be challenged in superior court. .