A shareholders` agreement is an essential document for the owners of a company. It rebalances control when there are different levels of participation and power in day-to-day decisions and protects the value and interests of each party. I have discussed the Constitution at length because, in my experience, there is often a lack of understanding of the role and importance of corporate incorporation. Even where there is a shareholder contract, the Constitution continues to play an important role in the internal regulation of a company. In practice, you will find that, when setting up a shareholders` agreement, it is common to amend the articles of association adopted at the time of incorporation or, often, to replace these provisions of the Constitution so that they comply with the provisions of the shareholders` agreement that concern the internal management of a company. It is important that the shareholders` agreement and the articles of association are formulated in such a way as to avoid inconsistencies between the two documents. Situations in which inconsistencies arise are taken into account in heading 8. While it is customary for a shareholder with a substantial interest to hold a position on the board of directors of a company, the law does not grant a shareholder holding a minority interest the right to hold a position on the board of directors of a company. Moreover, standard constitutions do not grant such a right. Accordingly, it is important that a minority shareholder who wishes to sit on the board of directors do so in a shareholders` agreement.
Often, you will find that such a right to a seat on the board of directors is subject to the shareholder maintaining a certain minimum stake in the company and/or the retention of an employee of the company (or an affiliate). In addition, it is necessary to consider whether the right to appoint a director is personal to the shareholder (i.e. the shareholder can only appoint himself) or whether he can appoint another party in his place. . . .