This is an agreement among the shareholders of an S Corporation. S Corporations are
particularly beneficial because they do not pay federal income tax. Rather, the
corporation’s profits and losses are passed through to the shareholders that must report
the income on their individual tax returns. For a business to be qualified for S
Corporation status, they must have one class of stock and less than 100 shareholders.
This agreement sets out the rights and responsibilities of each shareholder pertaining to
the sale of shares, termination, and shareholder deaths. This agreement should be
used by small businesses or other entities that qualify as S Corporations and want a
sample shareholders agreement.
S COMPANY SHAREHOLDERS’ AGREEMENT - COMPREHENSIVE
THIS SHAREHOLDERS’ AGREEMENT (hereinafter called the “Agreement”) made as of the
_____ day of ___________, 2______.
B E T W E E N:
ALL OF THE SHAREHOLDERS from time to
time who are listed in Schedule "A" annexed hereto,
(hereinafter called the "Shareholders")
OF THE FIRST PART
- and -
____________________, a company duly
incorporated under the laws of the State of
_______________________,
(hereinafter called the "Company")
OF THE SECOND PART
I. RECITALS
WHEREAS:
1.01 The Company is a duly incorporated ____________________ business Company
with its registered office located at ___________________, which is in the business of
_______________________, and such other and ancillary businesses as are necessarily
incidental thereto;
1.02 The Shareholders are all of the shareholders of the Company and as such have
entered into this Agreement to make arrangements regarding the organization and conduct of the
business of the Company, the transfer of their shares under certain circumstances and other
matters relevant to their shareholdings;
1.03 The Company has joined in this Agreement to be bound by the terms hereof and
to give full efficacy and effect to the terms hereof;
II. DEFINITIONS AND INTERPRETATION
2.01 As used in this Agreement, the following words and phrases mean:
A. "Act" means the legislation of the governing jurisdiction of the Company, as
amended from time to time;
B. "Agreement" means this Agreement and any Schedule annexed hereto or any
instrument supplemental or ancillary hereto, and the expressions "Article",
"paragraph" and "sub-paragraph" followed by a number means and refers to the
specified Article, paragraph or sub-paragraph of this Agreement;
C. "Board of Directors" means the board of directors of the Company elected from
time to time;
D. “Buyer” means the Company or those Continuing Shareholders who purchase an
Offering Shareholder’s shares pursuant to the terms and conditions of this
Agreement;
E. “Continuing Shareholders” means all Shareholders other than the Offering
Shareholder;
F. "Controlling Shareholder" means the individual who has either direct or indirect
control of a Company which is a Shareholder;
G. “Offering Shareholder” means any Shareholder, or his or her personal
representative, heirs, administrators and executors, who pursuant to this
Agreement must or does offer all or any of his or her Shares to the Company or
the Continuing Shareholders;
H. "Shareholder" means those holders of shares of any and all classes in the capital
stock of the Company as listed in Schedule "A" annexed hereto including any
amendments, modifications or updates thereto;
I. "Shareholders" means any two or more of the Shareholder as the context requires;
J. "Shares" means, unless the context otherwise requires, the Shares of any and all
classes in the capital stock of the Company; and
2.02 All payments contemplated herein shall be paid in US Dollars, in cash, by wire or
by certified check or bank draft.
2.03 The division of this Agreement into articles and paragraphs is for convenience of
reference only and shall not affect the interpretation or construction of this Agreement.
2.04 This Agreement shall be governed by and construed in accordance with the laws
of the State of _________________.
2.05 All words and personal pronouns relating thereto shall be read and construed as
the number and gender of the party or parties referred to in each case require and the verb shall
be construed as agreeing with the required word and pronoun.
2.06 When calculating the period of time within which or following which any act is to
be done or step taken pursuant to this Agreement, the date which is the reference date in
calculating such period shall be excluded. If the last day of such period is a non-business day,
the period