When and How Often Should We Review Our Shareholders’ Agreement?
A shareholders’ agreement is a cornerstone document that governs the relationship between shareholders and sets the rules for managing a company. But it’s not a “set and forget” document. Understanding how often we should review our shareholders’ agreement is crucial for keeping your business aligned with its goals and legal requirements.
Why Regular Review of Your Shareholders’ Agreement Matters
Business environments change rapidly. Market conditions shift, laws are updated, and company structures evolve. These changes can all impact the effectiveness of your shareholders’ agreement. Regularly reviewing this document helps:
- Address shifts in business strategy
- Incorporate new shareholders or changes in shareholding
- Resolve disputes before they escalate
- Ensure compliance with updated laws and regulations
Failing to review your agreement regularly can lead to misunderstandings, conflicts, or even costly legal battles.
How Often Should We Review Our Shareholders’ Agreement?
Annual or Biennial Reviews Are Best Practice
Most experts recommend reviewing your shareholders’ agreement at least once every one to two years. This frequency allows your company to stay agile and responsive to both internal and external changes.
Key Events Triggering Immediate Review
In addition to scheduled reviews, certain events should prompt an immediate review:
- Changes in shareholding or new investors
- Major company decisions like mergers or acquisitions
- Amendments to company objectives or strategy
- Changes in relevant legislation impacting shareholder rights
Reacting promptly to these events ensures your agreement remains relevant and protective.
What to Look for During Your Review
When reviewing your shareholders’ agreement, focus on key areas including:
Shareholder Rights and Obligations
Ensure roles and responsibilities remain clear and fair for all parties.
Dispute Resolution Mechanisms
Check that procedures for resolving conflicts are practical and effective.
Exit Strategies
Verify that buy-sell clauses and exit options reflect current shareholder expectations.
Dividend Policies
Confirm that the distribution of profits aligns with the company’s financial position and shareholder agreements.
How Burger Huyser Attorneys Can Help
At Burger Huyser Attorneys, we specialize in corporate law and understand the complexities of shareholders’ agreements. Our expert team can guide you on when and how to review your agreement to protect your interests and promote business harmony.
Stay Ahead with Regular Shareholders’ Agreement Reviews
Don’t wait for problems to arise—proactively managing your shareholders’ agreement safeguards your company’s future. Reach out to Burger Huyser Attorneys today to schedule your shareholders’ agreement review and keep your business on the right track.
Contact Burger Huyser Attorneys, and book a consultation.
To speak to one of our experienced attorneys in South Africa for immediate assistance, contact us on the numbers below:
Randburg call 061 516 6878; Roodepoort call 061 516 0091; Sandton call 064 555 3358; Pretoria call 064 548 4838;
Centurion call 061 516 7117; Alberton call 061 515 4699; Bedfordview call 061 536 3223
DISCLAIMER: Information provided in this article does not, and is not intended to constitute legal advice. READ MORE
