Shareholders’ agreements are contractual instruments frequently used in practice. They meet the need for shareholders to create personal relationships between themselves.
Legally, the relationship between a shareholder and the company limited by shares (société anonyme; SA) in which he or she holds a stake is strictly capitalistic. The shareholder’s obligation is therefore essentially limited to paying up the capital amount corresponding to the price of the shares subscribed. There is no duty of loyalty, either to the company or to the other shareholders (there are certain exceptions, notably where a shareholder occupies a position of de facto body of the company, through his or her concrete influence on the formation of the company’s will). Besides, the possibilities to include in the articles of associations provisions restricting shareholders’ freedom to dispose of their shares are exhaustively and restrictively provided for by law. Shareholders’ agreements allow to contractually create such rights and obligations binding the shareholders.
Shareholders’ agreements are also used to regulate contractual relations between partners in limited liability companies (société à responsabilité limitée; Sàrl). However, the need to use this instrument in this context must be carefully considered, as limited liability company law allows a number of obligations to be incorporated directly into the articles of association, thereby reinforcing the binding effect of these obligations (particularly vis-à-vis the company or the successors). It is therefore necessary to determine on a case-by-case basis whether the rights and obligations that the partners of a limited liability company wish to regulate can be provided for in the articles of association, and if so, whether there are any grounds for preferring to regulate them in a shareholders’ agreement (for example, confidentiality, as the articles of association are accessible to the public).
The legal or factual needs of shareholders that may justify recourse to a shareholders’ agreement thus vary from one company to another, depending for example on the type of company or the circle of shareholders.
Shareholder agreements may contain provisions on the following aspects in particular:
- Clauses intended to influence the formation of the company’s will (voting agreements, in particular);
- Clauses aimed at influencing or determining the composition of the shareholder circle (restrictions and regulation of the ability to dispose of shares, in particular pre-emption rights, exclusion clauses, continuation clauses, etc.);
- Clauses designed to influence corporate governance, in particular the composition of the board of directors ;
- Clauses regulating succession within the company ;
- Clauses designed to protect the interests of an investor (particularly in venture capital transactions).
In the context of a family company, shareholders will generally seek to restrict the circle of shareholders by including clauses in their agreement restricting the transfer of shares (pre-emption rights, for example) and guaranteeing a certain representation of family members on the board of directors or in management.
By contrast, a shareholders’ agreement concluded when an investor takes a stake in a start-up will essentially seek to protect the founders’ interests in retaining control over the company’s long-term development, or in obtaining a fair return in the event of a trade sale, on the one hand, and the investor’s interests in protecting his investment and obtaining as high a return as possible for its duration, on the other.
The clauses to be included in a shareholders’ agreement thus depend on the concrete economic and legal stakes for the parties.
It should be noted that shareholders’ agreements are not specifically regulated by Swiss positive law (unlike other contracts such as contracts of sale, employment contracts, leases, etc.). Their legal nature may depend on the circumstances. In most cases, however, in the absence of a provision to the contrary or a specific rule in the agreement, the rules governing simple partnerships will apply (art. 530 ff of the Swiss Code of Obligations). As these rules are often ill-suited to the issues and context of a shareholders’ agreement, it is essential to include regulations in the agreement that are as clear, precise and comprehensive as possible.
When drawing up the shareholders’ agreement, it is also important to bear in mind the rules of corporate law, as certain clauses of the agreement may collide with mandatory rules of law (e.g. with regard to the non-transferable powers vested in the respective corporate bodies).
In addition, the rules governing the permissible content of the articles of association must be taken into account, in order to coordinate them as effectively and efficiently as possible with the clauses of the shareholders’ agreement, in line with the interests and objectives of the parties. Unlike the articles of association, which are enforceable against the company and its successors (in particular subsequent purchasers of shares in the company), the shareholders’ agreement is only effective between the contracting parties. It is therefore generally advisable to include any clauses that may be relevant (e.g. approval clauses ; clauses d’agrément) in the articles of association, which requires to take a global approach, including the drafting or modification of the articles of association.
Our team of THEVOZ & Partners has extensive and recognized experience in drafting and negotiating shareholders agreements, and in resolving disputes linked to their execution. Our partners Olivier Francioli and Fabrice Kuhn have been invited as experts to give a lecture on this subject to members of the wealth planning department of one of Switzerland’s two leading banks in May 2023 (see the LinkedIn publication on this subject).
If you seek legal advice or guidance on this or any other issue in the field of commercial law, our team will be pleased to provide you with professional, personalized assistance.