Shareholders’ Agreements – Rights, Duties and Exit Provisions

When there are multiple shareholders, it is particularly important to have clear rules on decision-making, capital structure, and profit distribution. From the outset, consider exit clauses with specific “good leaver” or “bad leaver” exclusions and severance clauses, as well as preemptive rights. Customized articles of association and a separate shareholders’ agreement in Germany or a pacte d’associés in France create legal certainty. Our lawyers specializing in corporate law can support you in drafting and implementing these documents.

A typical shareholders’ agreement (pacte d’associés) includes provisions regarding voting rights, transfers, representation, management, and profit distribution. Provisions that primarily apply in the event of withdrawal, such as preemptive rights or non-competition clauses, are also often included. Our lawyers specializing in corporate law draft agreements that balance economic interests with legal clarity.

In principle, provisions regarding profit distribution, shareholders’ departure with severance clauses, and non-competition clauses may be included directly in the articles of association (statutes). However, since articles of association are generally published, they can be viewed by anyone. Often, however, there is an interest in keeping such critical information purely internal. A shareholders’ agreement offers the ability to individually structure company processes that are to remain confidential. However, according to the latest French case law, the provisions of the articles of association always take precedence over shareholders’ agreements. Our lawyers specializing in corporate law will advise you on legally permissible and strategically sensible contract designs.

A change in shareholders requires a precise contractual basis to clearly define procedures, approval requirements, and transfer modalities. Without clear regulations, issues may arise during the transfer of shares. Typical instruments include preemptive rights, tag-along rights, drag-along rights, and approval requirements from the company or other shareholders (transferability restrictions). Our lawyers specializing in corporate law develop customized contractual clauses that facilitate smooth shareholder changes and minimize legal risks.

Conflicts between shareholders can significantly hinder a company’s ability to act and undermine its stability. Proactive structuring, particularly through mediation, arbitration, or exit clauses, can help prevent lengthy legal disputes. Regulations on the valuation and transfer of shares in the event of a conflict are also essential. Our lawyers specializing in corporate law support companies in establishing practical conflict avoidance and resolution mechanisms.