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Shareholders Agreement
How to regulate and personalize the management of your company?

In some cases it is useful for the shareholders of a company to prepare a Shareholders Agreement that would regulate in details and personalize, in respect of the law and the bylaws, the management of their company.

Why and when to execute a Shareholders Agreement?

The motives to prepare a Shareholders Agreement are diverse. A Shareholders Agreement can deal with management issues that are not regulated by the law or even by the bylaws. Moreover it can be used to agree on specific or complex matters between shareholders. For example a shareholders agreement usually covers the following topics: governance and constitution of Board and committees in a joint-stock company, granting additional rights to minority shareholders over reserved matters, regulating the distribution of dividends and the transfer of shares, identifying events of default that would result in termination, stipulating an exit strategy for an investor including tag and drag along rights.

What formalities must Shareholders’ Agreement comply with in Lebanon?

There are no provisions under Lebanese law concerning Shareholders Agreements. Therefore it should comply with the general provisions applicable to any agreement or contract. Thus a Shareholders Agreement is formed by the sole and free consent of the parties. There is not a specific form or registration required.

What are the Limits of the Shareholders Agreement?

There is no restrictions relating to the content of such agreements as long as it comply and do not contradict public and mandatory applicable laws.

However the necessity of preparing a Shareholders Agreement is debatable and varies depending on many factors. Some of these factors include the nature of the company and its business, the need for protection of a group of shareholders, the need to fill a gap for issues not regulated by the law, the need to keep confidential some information, the need for an exit strategy and other attractive options for investors. The shareholders have also to bear in mind that many of their concerns can be resolved in the bylaws without executing a Shareholders Agreement and that usually drafting a Shareholders Agreement is complex and requires time and may cost substantial lawyer fees. 

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