Shareholders Agreement in Israel
The article provides information about a shareholders agreement in Israel. This is also known as a joint venture agreement (JVA). When two or more businesses seek to collaborate, they often use a shareholders agreement.
Companies must have a number of important documents that outline and describe its methods of operation. The main document companies have is an article of association, which details the understanding between the company and shareholders or between shareholders themselves. This document addresses how powers are delegated in the company and the various responsibilities of different parts of the company. However, companies often need additional documents to address various agreements between shareholders in a company. One such document is a shareholders agreement.
This article explains the various parts of a shareholders agreement by addressing frequently asked questions and how our law office can help you with this matter.
Why should I have a shareholders agreement?
There are a few reasons people choose to have a shareholders agreement. Simply, it allows two or more parties to join forces in a business endeavor around a shared goal, allowing them to maximize their strengths, minimize their weaknesses, and leverage their expertise through collaboration. It is important to have a shareholders agreement to establish the partnership and indicate each party’s commitments to the other.
What should I include in a shareholders agreement in Israel?
Shareholders agreements generally include a number of components, including the purpose of the agreement, rights and obligations of each party, provisions about the transfer of shares between parties, the scope of the board of directors, and clauses on confidentiality and non-compete, how disputes should be resolved, and under which circumstances the agreement will be terminated. We elaborate on a few of these below.
Transferring shares
It is important to note how transfers of shares will be undertaken. For example, perhaps you wish to stipulate the approval of the board of directors or approval from other shareholders. Additionally, it is important to detail how the transfer of shares will take place, how they will be valued, and how any dispute regarding this transfer will be addressed.
Confidentiality clauses and non-compete clauses
Including clauses about confidentiality or non-compete are important to protect both confidential information in the endeavor and also to prevent shareholders from competing with one another, either during or after their involvement in the corporation. This section should also outline what will happen if these clauses are breached by shareholders.
Resolving disputes
This section of the shareholders agreement details how disputes will be resolved. It can, among other things, include arbitration or mediation. Similar to some of the previous items, it should likewise address the consequences of breaching any of the agreements.
Termination
While a shareholders agreement is often drawn up at the beginning of a venture, it is also important to consider the end of a venture. This section should address how and under what circumstances the shareholders agreement can be terminated. For example, it can detail the agreement will be terminated if they face bankruptcy or insolvency.
What are the types of shareholders agreements?
There are a few different types of shareholders agreements.
First, there can be shareholders agreements between all the founders of a company.
Second, there can be an agreement between old and new shareholders who are working on a joint venture.
Third, there can be a voting agreement between some of the shareholders in a company about issues they decide to be responsible for (appointing people in the company, etc.). This last version often includes the specific purpose of the agreement and what is the scope of these’ shareholders’ authority in a limited and specific topic.
In conclusion, these various elements, together, comprise an essential document that protect the interests of the shareholders and ensure that all parties are aware of their obligations.
If you seek further information about the Israeli judicial system as related to Israeli corporations, see the information provided on the Ministry of Justice’s website.
Contact Us
If you are interested in having help with your shareholders agreement in Israel, please contact us. Our law office has extensive experience on corporate and contract law, as well as other legal fields, and we would be happy to help you.
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