Shareholder agreements

Shareholder agreements are contracts drawn up between the shareholders of a company.
They are generally used to govern relations between shareholders and to define the rights and obligations of each party, particularly in special situations such as the sale of shares, the transfer of shares in the event of succession, or the distribution of profits.
Shareholder agreements are widely used in Switzerland, and can be adapted to the specific needs of each company.

Shareholder agreements play a crucial role in preventing conflicts between a company’s shareholders.
When several parties are involved in a company, particularly a public limited company, it is advisable to clarify the rights and obligations of each party by means of a shareholders’ agreement.
However, in Switzerland, this type of agreement is not regulated by law, and there is no standard contract, as relations between shareholders vary from company to company.
It is therefore essential to seek the advice of a competent lawyer when drawing up the shareholders’ agreement, to avoid conflicting situations and ensure that the interests of all parties are well taken into account.

The purpose of this text is to examine some of the clauses commonly found in shareholder agreements in Switzerland.

Right of emption and pre-emption, purchase obligation

Emption and pre-emption rights allow one shareholder to buy out another shareholder, but in a specific way.
The emption right clause stipulates that if a shareholder wishes to sell his shares, he must first offer them to the company or other shareholders before selling them to a third party.
The pre-emption clause authorizes existing shareholders to buy back the shares of a shareholder wishing to sell them to a third party.
Finally, the obligation to purchase obliges a shareholder to sell his shares to another shareholder or to the company in specific situations, such as the breach of certain undertakings or the end of his mandate.

Trade-in rights

The buyback right gives a shareholder the option of buying back his or her shares from a third-party acquirer, under certain conditions specified in the shareholders’ agreement.
For example, in the event of a third party acquiring a majority stake in the company, minority shareholders may exercise their buy-back right to recover their shares.
The procedures for exercising this right, as well as the deadlines and conditions to be met, must be specified in the shareholders’ agreement.

Type of vote

The shareholders’ agreement may specify the voting system to be used at Annual General Meetings, opting for either per capita or per share voting.
In the case of individual voting, each shareholder is entitled to one vote, irrespective of the number of shares held.
In share voting, shareholders are entitled to vote according to the number of shares they own.
The choice of voting method will depend on shareholders’ preferences and the size of the company.

Non-competition

The purpose of the non-competition clause is to prevent shareholders from engaging in activities that compete with those of the company, in order to protect the company’s interests.
This clause is designed to prevent shareholders from using their knowledge or experience to favor another company to the detriment of the company.

Obligations de suite

When a company is sold, the buyer may wish to acquire all the shares in the company, especially in the case of acquisitions by international groups.
Obligations de suite, also known as drag-along rights, enable the buyer to compel other shareholders to sell their shares under the same conditions and at the same price.

Exit rights

Tag-along rights, commonly known as exit rights, enable minority shareholders to sell their shares under the same conditions and at the same price as majority shareholders.
This clause is designed to protect the interests of minority shareholders by offering them a degree of protection in the event of a sale of the company.

Constitution of the General Meeting

The shareholders’ agreement may include specific provisions for the constitution of the general meeting, such as the quorum required for the meeting to be validly constituted, or the deadline for convening shareholders to the meeting.
These provisions are designed to ensure that the general meeting runs smoothly and that appropriate decisions are taken.

Veto rights, equal votes

The veto clause gives one or more shareholders the power to oppose certain important decisions, even if the majority of shareholders are in favor of those decisions.
As for the tie-breaking clause, it is used to resolve situations where the vote is tied at the Annual General Meeting.
This clause defines the procedures to be followed in the event of a tie.

Representation

The shareholders’ agreement can lay down rules for the representation of shareholders at the Annual General Meeting, such as the possibility of being represented by a proxy or voting from a distance.
The aim of this provision is to facilitate shareholder participation at the Annual General Meeting, and to ensure that all shareholders have a voice in important company decisions.

Shareholder agreements: essential documents

Shareholder agreements are essential documents governing relations between a company’s shareholders.
They clarify the rights and obligations of each shareholder, regulate decision-making processes and provide mechanisms for resolving conflicts.
The provisions contained in shareholders’ agreements are varied, and it is important to draft them carefully to meet the specific needs of shareholders and ensure good corporate governance.
To benefit from high-quality support in drafting these agreements, it is strongly recommended to call on the services of a lawyer specializing in corporate law.