Shareholders’ agreement

Many directors of a Dutch private limited company (BV) are also shareholders in that BV. If there are other shareholders in the company as well, it is advisable, and may even be necessary, to enter into an agreement between the company’s shareholders: a shareholders’ agreement. Its purpose is to record arrangements governing the relationship between the shareholders and to safeguard the continuity of the company. A shareholders’ agreement is often used to supplement the company’s articles of association.

Drafting a shareholders’ agreement

When drafting a shareholders’ agreement, there are a number of important provisions that should be included:

Voting arrangements
This section sets out how voting rights are allocated and under what circumstances they may change. This helps ensure balanced decision-making within the company.
Sale of shares
What happens if a shareholder decides to sell their shares? A shareholders’ agreement contains provisions on whether and on what terms a sale may take place and/or rules on the valuation of shares.
Disputes
Unfortunately, disputes may arise between shareholders. The agreement sets out how such conflicts are to be dealt with, for example through mediation or arbitration.
Dividend policy
This sets out when and how the company’s profits are distributed among the shareholders. This may range from a fixed percentage of profits to a discretionary policy.

Shareholders’ agreement versus articles of association

Although a company’s articles of association set out the basic principles governing its organisation, they do not cover every detail or potential scenario. This is where a shareholders’ agreement can be useful. It can contain specific and detailed arrangements that are not included in the articles of association, or that differ from them. Unlike the articles of association, the agreement is not public. This means that sensitive information and arrangements can remain confidential, which is often desirable for shareholders.

However, provisions in the articles of association and the shareholders’ agreement may conflict with one another. In the Netherlands, the articles of association generally take precedence over the agreement.

This means that, where there is a conflict between a provision in the articles of association and a provision in the shareholders’ agreement, the provision in the articles will generally prevail. It is therefore essential to ensure that the provisions of the articles of association and the shareholders’ agreement are aligned, or to agree specifically that, to the extent possible, the provisions of the shareholders’ agreement will prevail over the provisions of the articles.

Advantages and disadvantages
of a shareholders’ agreement

Advantages of a shareholders’ agreement

Flexibility: A shareholders’ agreement offers flexibility to make specific and detailed arrangements tailored to your company and its shareholders. These may include, for example, a specific policy governing the sale of shares or a bespoke method of dispute resolution.
Confidentiality: Unlike the articles of association, a shareholders’ agreement is not public. This means that sensitive information and arrangements remain confidential. This may be desirable if you prefer to keep certain arrangements or information private.

Disadvantages of a shareholders’ agreement

Enforcement challenges: It can be complicated to enforce provisions in a shareholders’ agreement, particularly if a dispute arises. In addition, new shareholders are not automatically bound by the agreement. A new shareholder must first sign or accede to the agreement.
Amendments: Any amendment to the shareholders’ agreement requires the consent of all parties. Obtaining everyone’s consent can be time-consuming and potentially complicated, particularly where there are many shareholders.

Why instruct our corporate lawyers?

Drafting a shareholders’ agreement is a complex process that must be managed carefully in order to prevent or resolve future legal complications and shareholder disputes. Our corporate lawyers can assist you with this.

We will guide you in drafting a shareholders’ agreement that reflects the needs and specific circumstances of your company. We ensure that you are fully informed about the implications of such an agreement and that it complies with all applicable legal requirements. Need assistance? Please feel free to contact us.