Shareholder and Partnership Agreements
The biggest disputes between a company’s shareholders often arise from matters nobody discussed while everything was going well: who can sell shares and when, what happens if a new investor comes in, who gets a founder’s shares if they leave? We draft your shareholders’, partnership and investment agreements, structuring the parties’ rights and obligations to fit the company’s current and future structure.
What is a shareholders’ agreement?
A shareholders’ agreement is a contract between a company’s shareholders governing the management of the company, share transfers and the relationships between the shareholders. It contains arrangements that cannot be included in the articles of association, or that the shareholders do not want to be public.
Typical provisions include rights to appoint board members and veto rights over important decisions, pre-emption rights, tag-along rights, drag-along rights, anti-dilution protection, non-compete obligations and the resolution of deadlock situations.
Can a shareholders’ agreement be enforced against the company?
A shareholders’ agreement is a contract under the law of obligations and, as a rule, binds only the shareholders who signed it; it cannot be enforced directly against the company or against third parties who are not party to it. Important provisions such as share transfer restrictions and share classes should therefore also be reflected in the articles of association to the extent the Turkish Commercial Code allows, and the agreement should be backed by sanctions such as contractual penalties.
Scope
- Drafting shareholders’, partnership and investment agreements
- Reviewing existing agreements in light of a new investment or change in ownership
- Reflecting the agreement’s provisions in the articles of association
- Conducting negotiations between shareholders
How We Work
- Listening to the ownership structure, the parties’ expectations and the company’s growth plans
- Agreeing key principles on management, share transfers, exit and disputes (term sheet)
- Drafting the shareholders’ agreement and the necessary amendments to the articles of association
- Conducting negotiations between the parties and preparing the agreement for signature
- Preparing general assembly and board resolutions and following up registration
Team
Frequently Asked Questions
What are tag-along and drag-along rights?
A tag-along right allows minority shareholders to sell their shares on the same terms when the majority shareholder sells. A drag-along right obliges the other shareholders to sell their shares on the same terms if a specified majority decides to sell the company. Together, they protect both the minority and the buyer in a sale of the company.
What happens to a founder's shares if they leave the company?
If this has not been addressed in advance in the shareholders' agreement, the departing founder keeps their shares. The risk can be managed by setting out "good leaver" and "bad leaver" cases in the agreement, and to whom and at what price the shares are transferred in each case.
What happens if two equal shareholders cannot reach a decision?
Equal partnerships carry a high risk of deadlock. The agreement can provide first for negotiation and mediation and, if these fail, for mechanisms allowing one shareholder to buy the other's shares. Setting out these mechanisms from the start prevents the company from becoming locked.
Can a shareholders' agreement also be made in a limited liability company?
Yes. However, because share transfers in a limited liability company are subject to stricter statutory rules, the agreement must be structured in line with those rules and some provisions should also be added to the company's articles.
Would you like to discuss this service? Schedule a meeting with us — the first meeting is free of charge.
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