SPM Ltd. and BRB Ltd. wish to form a new company in the name of BNPM Ltd. for the purpose of manufacturing different types of inks in India. Both companies seek your advice on the key issues which must be kept in mind wh

Essential Features of a Shareholders' Agreement (SHA) Some of the key issues that must be kept in mind while drafting the SHA are summarised below: The business of the new company/LLP; Manner and extent to which resources (financial, manpower, technology, etc) will be brought in; Provisions relating to allotment and transfer of shares; Constitution of the Board of Directors/Designated Partners; Manner in which decision making will take place (majority vote or consensus); Decision regarding the Chairman and Managing Director of the entity; their rights, duties and responsibilities; Persons responsible for managing finances, marketing, production, etc.; Dividend distribution policy; Term of office of the nominated directors, the manner of their appointment and changes among them; Valuation of the company at the time of separation; Dispute resolution mechanism. The above examples are indicative and are not exhaustive. Accordingly, SPM Ltd. and BRB Ltd. are advised on the key issues that must be kept in mind while drafting the Shareholder's Shareholders' Agreement (SHA) and ensure that the SHA aligns with the Articles of Association (AOA) of BNPM Ltd