Minority Friendly Shareholders Agreement Law and Legal Definition

A minority friendly shareholders agreement is one which protects the interests of shareholders who own less than 50% of the shares. Such agreements may cover issues such as, among others, the conduct of the affairs of the company, financing, including shareholder contributions, restrictions on transfers of shares, including rights of first refusal, compulsory buyouts and their triggers, death, incapacity or departure of a shareholder, and default of a shareholder pursuant to the agreement. Minority shareholder rights can be protected without unduly restricting management of the company by including provisions regarding the appointment of directors, quorum requirements and provisions to deal with deadlocks in votes of the directors or the shareholders. Conversely, a majority friendly shareholders agreement is one which protects the interests of those who hold a controlling interest in the company.