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Shareholder Agreement
"I need a shareholder agreement outlining voting rights, dividend distribution, and buy-sell provisions for a corporation with 5 shareholders, including a 3-year vesting schedule for new shares and a 60-day notice period for share transfers."
What is a Shareholder Agreement?
A Shareholder Agreement spells out the rights, duties, and relationships between people who own shares in a Filipino corporation. It goes beyond what's in the company's Articles of Incorporation by setting clear rules for buying and selling shares, making major decisions, and handling disputes between owners.
This crucial document protects both majority and minority shareholders under Philippine Corporation Law by covering specific situations like share transfers, dividend policies, and management appointments. It helps prevent deadlocks and misunderstandings while giving shareholders a roadmap for working together effectively in running the business.
When should you use a Shareholder Agreement?
Create a Shareholder Agreement when starting a new corporation in the Philippines or bringing in new investors. This agreement becomes essential for protecting everyone's interests, especially when dealing with family-owned businesses, joint ventures, or companies with multiple stakeholders who need clear guidelines for decision-making.
The timing is particularly important during major company changes: before accepting new shareholders, planning succession, or setting up voting arrangements. Having this agreement in place early helps prevent costly disputes and provides clear solutions for common scenarios like share transfers, dividend distributions, and management appointments under Philippine corporate law.
What are the different types of Shareholder Agreement?
- Shareholders Agreement Contract: Standard comprehensive agreement covering basic rights, obligations, and governance structure for all shareholders
- Corporation Shareholder Agreement: Specialized version for larger corporations with complex management structures and multiple share classes
- Shareholder Transfer Agreement: Focuses specifically on share transfer rules, right of first refusal, and exit procedures
- Shareholder Purchase Agreement: Details terms for buying or selling shares between existing shareholders or new investors
- Entrusted Shareholding Agreement: Addresses nominee shareholding arrangements common in family businesses
Who should typically use a Shareholder Agreement?
- Corporate Shareholders: All existing owners of company shares who need their rights and obligations clearly defined
- Company Directors: Board members who implement and enforce the agreement's terms in daily operations
- Corporate Lawyers: Draft and review agreements to ensure compliance with Philippine Corporation Code
- New Investors: Potential shareholders who must understand and agree to existing terms before buying in
- Corporate Secretary: Maintains official records and ensures proper documentation of shareholder matters
- Family Business Members: Relatives who need clear guidelines for ownership, succession, and management roles
How do you write a Shareholder Agreement?
- Company Details: Gather Articles of Incorporation, business registration, and current shareholding structure
- Shareholder Information: List all shareholders with their complete details, share percentages, and classifications
- Management Structure: Define voting rights, board composition, and decision-making processes
- Transfer Rules: Outline share transfer restrictions, right of first refusal, and exit procedures
- Financial Provisions: Specify dividend policies, funding obligations, and valuation methods
- Dispute Resolution: Determine mediation and arbitration procedures under Philippine law
- Template Selection: Use our platform to generate a legally-sound agreement tailored to your specific needs
What should be included in a Shareholder Agreement?
- Party Details: Full legal names and addresses of all shareholders and the corporation
- Share Structure: Classes of shares, voting rights, and ownership percentages
- Management Rights: Board composition, voting thresholds, and reserved matters
- Transfer Provisions: Right of first refusal, tag-along and drag-along rights
- Dividend Policy: Distribution rules and profit-sharing arrangements
- Dispute Resolution: Mediation and arbitration procedures under Philippine law
- Exit Mechanisms: Share valuation methods and buyout procedures
- Confidentiality: Non-disclosure and protection of company information
What's the difference between a Shareholder Agreement and a Joint Venture Shareholders' Agreement?
A Shareholder Agreement differs significantly from a Joint Venture Shareholders' Agreement in several key aspects, though both deal with company ownership and management under Philippine law.
- Scope and Purpose: Standard Shareholder Agreements govern relationships between all shareholders in a single company, while Joint Venture agreements specifically manage partnerships between two or more separate entities creating a new business venture
- Project Focus: Joint Venture agreements typically include specific project goals, timelines, and resource commitments, whereas Shareholder Agreements focus on ongoing company governance
- Duration: Joint Venture agreements often have defined end dates or project completion terms, while Shareholder Agreements usually continue indefinitely
- Resource Allocation: Joint Venture agreements detail specific contributions from each party, including technology, expertise, or capital, while Shareholder Agreements primarily address ownership rights and management
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