In the dynamic and complex business world, predictability and legal certainty are fundamental pillars for the sustainable growth and longevity of any business.
If you are a corporate lawyer or accountant seeking to offer effective solutions to your clients, a shareholders' agreement emerges as an indispensable tool in day-to-day business operations.
The shareholders' agreement, often underestimated, is a strategic roadmap that anticipates challenges, aligns expectations, and defines the rules of the game among the shareholders of a company.
In this article, I want to explain the importance, fundamentals, and practical applications of shareholder agreements as a crucial instrument for corporate governance and business longevity.
Starting from scratch: what is a shareholders' agreement?
In essence, a shareholders' agreement is a contract, entered into between the shareholders of a public limited company or the quota holders of a private limited company, that establishes additional and complementary rules to those already provided for in the articles of association (or bylaws) and corporate law.
In reality, the main objective is to regulate the relationships between partners, disciplining issues ranging from decision-making to the entry and exit of members, preventing misunderstandings that could compromise the health and future of the company.
The possibility of drafting a shareholders' agreement is based on the autonomy of the parties' will, a fundamental principle of Civil Law that allows individuals the freedom to contract and create rules that will govern their relationships.
It is clear that this private autonomy is not absolute, being modulated by other principles, such as objective good faith and the social function of the contract.
Good faith, in particular, requires that the parties act with loyalty and mutual trust, both in the conclusion and execution of the agreement, and serves as an interpretative guide to resolve ambiguities.
The importance of a shareholders' agreement lies in the inadequacy of corporate documents and legislation to encompass all the particularities of human and business relationships.
The dynamism of the market demands flexibility and adaptability that a social contract, being more formal and with more bureaucratic amendment procedures, cannot always offer.
The shareholders' agreement, in turn, allows for deep customization, adapting to the specific needs of each company and its members.
What are the structural pillars of a shareholders' agreement?
To be truly effective, a shareholders' agreement must address a number of crucial topics, transforming itself into a smart management strategy.
Some of the essential pillars include:
1 – Rights and duties of members
The agreement may detail how voting rights are exercised, especially on strategic issues that require greater alignment, or access to management information.
It can, for example, provide for the creation of advisory boards, with the participation of external experts, or the need for qualified quorums for specific decisions, going beyond what is established by law or the articles of association.
2 – Mechanisms for transferring shares or stock
One of the most sensitive points in any company is the transfer of corporate shares.
A shareholders' agreement can establish clear rules for the purchase and sale of shares or stock, including:
- Right of first refusal: It ensures that the other partners have the first opportunity to acquire the stake of a partner who wishes to leave the company.
- Tag-along and Drag-along: Clauses that protect minority shareholders (tag-along), allowing them to sell their stakes under the same conditions as majority shareholders in the event of a sale of control, and clauses that allow majority shareholders to force the sale of minority shareholders' stakes (drag-along) under pre-determined conditions, facilitating the sale of the company to a third party.
- Compulsory sale clauses (Buy-Sell Agreements): Triggered by specific events, such as the death, incapacity, or divorce of a partner, defining the procedure and price for acquiring the stake, thus avoiding prolonged disputes and the entry of unwanted third parties.
And what about succession planning?
Another important point is inheritance law, a complex issue that can generate significant uncertainty for companies.
While comprehensive, inheritance law does not always offer specific solutions for business continuity.
A shareholders' agreement can stipulate what will happen to a partner's stake in the event of death, disability, or other unforeseen circumstances, ensuring the continuity of the business and protecting the interests of heirs and remaining partners.
It is an ideal tool for protecting a company's assets against unforeseen events in the lives of its founders or members. And of course, clarity on this point avoids costly and lengthy litigation that could jeopardize the business.
Contemporary debates regarding shareholder agreements
The "Economic Freedom Law" (Law No. 13.874/2019) reinforced the idea of minimal state intervention in private relations.
However, this reduced intervention does not mean a lack of control or disregard for social values. On the contrary, the interpretation and application of shareholder agreements must be carried out in light of constitutional values, ensuring that the agreement does not become an instrument for abusive practices or that violates the rights of third parties or of society itself.
Judges, when interpreting such agreements, do not limit themselves to the literal wording of the text, but seek the common intention of the parties and compliance with objective good faith and market practices.
Thus, the effectiveness of a shareholders' agreement in practice depends not only on its clear and comprehensive wording, but also on how it is viewed and applied by the shareholders and, eventually, by the Judiciary.
When a shareholders' agreement is brought before a judge for judicial review, the interpretation is not limited to a merely formal analysis. The judge will seek the true intention of the parties, the customs of the place, and objective good faith.
The Code of Civil Procedure, with the adoption of procedural legal transactions, allows the parties, to a certain extent, to shape the judicial procedure itself for the resolution of their conflicts, which can be an extension of contractual autonomy to the procedural sphere.
However, it is crucial to remember that, according to the principle of the autonomy of the legal entity, the company is not to be confused with its partners.
Although a shareholders' agreement binds the signatories, it cannot, as a rule, impose obligations directly on the company without the proper expression of will from the competent corporate bodies.
Drafting a shareholders' agreement requires not only technical knowledge of Corporate and Contract Law, but also a keen strategic understanding of business dynamics and human relationships.
It is a job that requires the ability to anticipate scenarios and create flexible solutions that can withstand the test of time and the constant changes in the economic and social environment.
If you wish to deepen your studies in this area, you should check out the Postgraduate Program in Private and Business Law at IDP , which aims to train professionals prepared to deal with the real challenges of practice, combining academic depth, practical application, and strategic vision.
With subjects ranging from Corporate Law and Agreements between Partners and Shareholders, to Procedural Strategy in First Instance and Courts, Contemporary Consumer Law and Estate Planning, the course offers a complete and integrated education.
Furthermore, you will have 100% online and live classes, with a nationally and internationally renowned faculty, and you will also be part of a networking group that connects the most qualified professionals in the legal market.
If your goal is to transform knowledge into authority, theory into practice, and opportunities into results, the IDP Postgraduate program is the next step in your career. Enroll and become the Private and Corporate Law attorney the market needs.
