Additional clauses to be added: The following clauses are not provided for in either the CIPC models or the Companies Act, but may be important to be included in an MOI: it is not mandatory for a company to have a shareholders` agreement. However, given that this is a private document and has not been filed with CPIC, it is useful to conclude whether there are any truly confidential matters on which shareholders and the company wish to agree. In our experience, there are rarely terms that are truly private or confidential and, as such, there is little need to have a shareholders` agreement in addition to the mandatory MOI. We have on this site a shareholder contract for private companies for sale. Learn more here. A shareholders` agreement is drawn up in accordance with your company memorandum (MOI) and can be adapted to the needs of your company. In addition, it can be modified if these needs change, provided that all shareholders agree, unlike the MOI, which requires changes to be submitted to CIPC. In summary, the MOI usually leads the long-term structure of the company, while the shareholders` agreement is a document that can be updated immediately by the different phases of the company`s growth. If for any reason you prefer a lawyer to create your shareholders` agreement, please send an email to email@example.com. If a company has used a brief standard form of CIPC MOI or if a company is still working according to the articles and memorandum drafted under the previous Companies Act, shareholders may be put at risk if they have left the management of the company in the hands of directors, as the amended provisions of the new Companies Act would not have been changed. There are also differences in how documents bind new shareholders. The MOI automatically binds new shareholders without their explicit consent, while a shareholders` agreement must be concluded before it is binding. You may not use this agreement if you have used the CIPC MOI short form to set up your private SMME business.
Learn more here. The MOI may also provide for the implementation, if necessary, of rules for the company and its shareholders. Please note that this shareholders` agreement is compatible with MOIs designed to protect shareholder rights. Please do not use it if you are using the CIPC Cor form. 15.1.A (the short standard FORM of CIPC MOI) have been used to integrate your business. If you used the standard CIPC MOI short form to set up your business, please consider a change. The shareholders` agreement is a private document between the company and its shareholders and the shareholders between the shareholders. Unlike the MOI, a shareholder agreement is not mandatory.
A shareholders` agreement may address, among other things, the founding principles, forced sales of shares, trade restrictions and the specific performance of each shareholder. CIPC offers free MOI templates, but they are very simple and we would not recommend that they be used. They pass many important clauses that we can design into a tailor-made MOI to protect minority or majority shareholders, or even a single individual shareholder. The standard provisions of the Companies Act in the MOIs model can also be modified to match one or some of the shareholders, so at least the MOI model should be carefully modified by a lawyer to satisfy the client, and not just be taken over as is. It is recommended that a lawyer be consulted when creating a tailor-made MOI to include the protection of the shareholder represented by this lawyer. There are companies that sell either “standard” shareholder agreements of private companies or shareholder agreements automatically generated by private companies that seem to be adapted, among other things, to the rights of shareholders, not fully respecting the memorandum of creation of a company and what it contains, especially when it comes to a short standard formula of CIPC MOI. . . .