What is a shareholder agreement?

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A shareholder agreement for a North Carolina corporation is a legal contract between the shareholders of a corporation that outlines their rights and responsibilities. The agreement can be used to address a range of issues, including governance, management, and ownership matters.

Some common provisions in a shareholder agreement may include:

  1. Governance: The agreement may specify how the corporation will be managed and who will be responsible for making major decisions.
  2. Ownership: The agreement may outline the rights and responsibilities of each shareholder, including their voting rights, dividend rights, and restrictions on transferring their shares.
  3. Finances: The agreement may address how the corporation’s finances will be managed, including how profits will be distributed, how capital will be raised, and how debt will be managed.
  4. Dispute resolution: The agreement may include provisions for resolving disputes among shareholders, including mediation or arbitration.
  5. Exit strategy: The agreement may specify how shareholders can sell their shares or exit the corporation, including any restrictions or obligations that may apply.

A shareholder agreement can help provide clarity and certainty for shareholders, especially in closely-held corporations where there may be fewer shareholders and less established governance structures. It can also help prevent disputes and ensure that all shareholders are treated fairly. However, it’s important to consult with a corporate attorney before drafting or entering into a shareholder agreement to ensure that it complies with all legal requirements and protects the interests of all shareholders.

Will Blackton is a business lawyer based in Raleigh, North Carolina. You can reach Will at wblackton@bobllaw.com or (919) 636-5979.

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