Minority rights/ protections
What are the possible minority rights/protections that can be included in a Shareholders Agreement?
Shareholders’ agreements allow subscribers to override or modify an important number of statutory provisions. When it comes to possible minority rights or protections that could be included, the following provisions are the most commonly adopted:
- Special Approvals regarding fundamental changes to the corporation to require voting by minority shareholders;
- Voting Agreements also known as pooling agreements, allow minority shareholders to transfer their shares to a trustee and vote together as a block, instead of individually;
- Tag-along Rights allow minority shareholders to participate under the same conditions if a majority shareholder sells all or a portion of his or her shares;
- Pre-emptive Rights: it gives minority shareholders the first opportunity to acquire future shares that the corporation may issue (so as to reduce dilution of shares on new issuances);
- Right of First Offer requires majority shareholders to offer its shares to minority shareholders before offering them to third parties.
- Different rights to access corporate records.