[According to the Law of Expediency] 58. Shareholder Agreements in Private Companies: Key Points to Watch Regarding "Internet Templates"

*This content was translated by AI.

In private companies, it is not uncommon for two or more shareholders to conduct business together without entering into a shareholder agreement.

While no issues arise when relationships are good, conflicts can emerge without any clear basis when interests diverge due to differences in management policies or one party's resignation. A shareholder agreement is a crucial mechanism that pre-establishes consensus on matters such as share transfers, participation in management, and equity settlement upon withdrawal.

The problem is that many entrepreneurs use internet templates without modification. A shareholder agreement is a contractual obligation that is effective only between the parties involved; unlike the articles of incorporation, it lacks enforceability against third parties. Courts have ruled that even if a transfer restriction clause exists, a transfer to a third party in violation of such clause remains valid. The only remedy available is liquidated damages, which may even be reduced.

Call options and rights to request share purchase also require caution depending on the circumstances. In one case, the court ruled that share transfer cannot be recognized without a separate procedure substituting for a declaration of intent to transfer, even when the exercise of the purchase right and deposit of the purchase price have been completed. Additionally, there is a ruling stating that a startup's obligation to remain employed cannot be attributed to the shareholder's fault if business operations are suspended due to company circumstances.

For a shareholder agreement to be effective, the contract document alone is insufficient. A multi-layered design is necessary, including provisions in the articles of incorporation to restrict transfers with board approval, establishment of procedures for managing the shareholder register, and integration of share valuation methods. There have been cases where clauses granting specific shareholders the right to nominate directors were deemed invalid for violating the principle of shareholder equality; therefore, it is essential to verify whether any provisions conflict with mandatory legal rules.

A shareholder agreement is not merely a document but a design of corporate governance. The structure must vary depending on the industry, shareholder composition, and investment stage. If you are preparing for co-founding or seeking investment, remember that the current time, when relationships are strong, is the most appropriate moment to establish a fair agreement.

<© STARNEWS. All rights reserved. No reproduction or redistribution allowed.>

*This content was translated by AI.