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In a word, a shareholder’s agreement is a contract

It’s a private agreement between the potential or future shareholders of a company The contract governs how the company will function on matters like corporate governance, business activity, interaction between the shareholders and even on how they will vote on issues and topics that have been debated at during the General Shareholders’ Meeting

A shareholders agreement is absolutely essential when there are multiple people involved in the same venture It is highly recommended that the parties draw up a document that allows the different points of view to be considered and accordingly structured while also legally binding those that sign Making the document enforceable is important because failure to comply with the agreements allows for compensation and damages under Spain’s Civil Code

What are the requirements?

In Spain, a Shareholders’ Agreement can be signed privately between the shareholders or signed before a public notary It’s common practice for the agreement to be signed privately with a digital signature in order to formally validate the document

If the agreement is signed before a notary public, then there are guarantees in the event of any contractual breach So, the accuracy and validity of what has been signed does not have to be proven because the document is essentially public All public documentation in Spain is directly enforceable

In theory, no However, a recent Supreme Court case law stated that, if certain conditions are met and handled properly, the terms in shareholders’ agreement could legal bind the company

The shareholders’ agreement is a contract, so it’s subject to the terms that the parties agreed However, Spanish law has established thresholds for certain matters For example, at least 60% of the shareholders must approve the company’s annual accounts This can be increased to 80% but cannot be 100%

There must be at least two General Shareholders’ Meetings each year

Bylaws are one of the founding documents of any company and contain essential elements such as the company’s name, its economic activity or where it is located, among others

While shareholders agreements and bylaws can often contain the same types of agreements or arrangements, the main difference is the flexibility of the shareholders agreement compared with the bylaws For example, bylaws must be registered with the Commercial Registry which gives the parties less discretion over their application

It’s best practice to have this agreement when there are multiple parties involved in the same business project The aim is to structure the project appropriately and prevent future conflicts

A shareholders’ agreement outlines the lines of action for the partners in the situations reflected in the contract It also establishes routes to resolve any future corporate conflicts

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