Additional shareholders, takers and membership clauses ensure that shareholders continue to invest funds in the company and reward shareholders who invest in the company when needed. Shareholders should consider the possibility of a cash call when investing in a company in terms of finances and liquidity. The shareholders` pact must be drawn up by an experienced documentation expert, capable of drafting an infallible contract with all shareholder rights and obligations, the rights and obligations of the company, the rights of investors and how the company`s activities must be managed. The content of a shareholders` pact is established in accordance with the specifications of each company and the nature of the relationship it maintains with its shareholder, but there are several key elements that must be included in each shareholder pact. These important clauses of a shareholder agreement in India are the: while the statutes are the basic constitutional documents for all companies, they are generally standardized and mandatory. The statutes commit a company and its shareholders as shareholders and express the responsibilities of the directors, the nature of the transactions to be carried out and the means by which the shareholders exercise control of the board of directors. The right of pre-emption, the simplest and most common form of percentage dilution protection, gives shareholders the right, but not the obligation to acquire in the future in proportion to new shares of a company in order to maintain its proportionate ownership. This right may apply to all classes of shares or only to certain classes of shares. Perhaps you have other thoughts on the conclusion of a shareholder contract, to think, “It sounds good, but maybe my company doesn`t need it.” The truth is that every working relationship starts with the best of intentions, but we simply cannot guarantee how things will end. Parties to a shareholders` pact are free to include a compromise clause headquartered outside India and/or under another Indian law, as long as one of the parties to the shareholders is foreign to the territory. Any personal or private rights can be invoked by arbitration proceedings, and the same is confirmed by Bombay High Court in Messer Holdings Limited v. Shyam Madanmohan Ruia, in stark contrast to its decision in Western Maharashtra Development Corporation Ltd.
v. Bajaj Auto Ltd. There will be two important legal provisions that protect shareholder rights: one, which stems more from the Indian Contract Act of 1972 and the other from the Companies Act of 1956.