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Shareholders Agreement

entered into and between

[Shareholder 1]
and

[Shareholder 2]
and

[Shareholder 3]
and

[Shareholder 4]
and

[Shareholder 5]
and

[Name of the company].


(Company)

DELETE
This Shareholders Agreement template is a basic shareholders agreement framework for a company.
Extensive further provisions may be included if necessary for example: provisions regarding decisionmaking, transfer of shares, pre-emptive rights, drag-along and tag-along, restraints of trade, confidentiality
provisions, valuation methods etc.
Care should be taken in deleting or adding clauses to ensure that clause references remain correct and
that cross-references are also appropriately deleted/adjusted/amended.

277132487.doc

TABLE OF CONTENTS
Page
1.

PARTIES......................................................................................................................................................... 3

2.

RECORDAL.................................................................................................................................................... 3

3.

DEFINITIONS AND INTERPRETATION.........................................................................................................3

4.

SHARE CAPITAL OF THE COMPANY...........................................................................................................3

5.

DIRECTORS................................................................................................................................................... 3

6.

LOANS AND FUNDING.................................................................................................................................. 3

7.

BANK ACCOUNT AND SIGNING POWER.....................................................................................................3

8.

FINANCIAL ADMINISTRATION AND FINANCIAL STATEMENTS..................................................................3

9.

DIRECTORS REMUNERATION AND DIVIDENDS........................................................................................3

10.

MANAGEMENT AND MEETINGS.................................................................................................................. 3

11.

BINDING NATURE OF THIS AGREEMENT AND ENDORSEMENT OF SHARE CERTIFICATES................3

12.

INDEMNITY.................................................................................................................................................... 3

13.

ARTICLES OF ASSOCIATION OF COMPANY...............................................................................................3

14.

COMPULSORY SHAREHOLDER RESIGNATION AND LIQUIDATION.........................................................3

15.

VOLUNTARY RESIGNATION......................................................................................................................... 3

16.

DEATH OF A SHAREHOLDER....................................................................................................................... 3

17.

VALUATION OF SHARES AND LOAN ACCOUNTS......................................................................................3

18.

GENERAL OBLIGATIONS OF SHAREHOLDERS AND DIRECTORS...........................................................3

19.

DISPUTE RESOLUTION................................................................................................................................ 3

20.

JURISDICTION............................................................................................................................................... 3

21.

MISCELLANEOUS.......................................................................................................................................... 3

<insert name of firm>. Page 2 of 21

1. PARTIES
The parties to this shareholders agreement are 1.1.

[Shareholder 1];

1.2.

[Shareholder 2];

1.3.

[Shareholder 3];

1.4.

[Shareholder 4];

1.5.

[Shareholder 5]; and

1.6.

[ABC] registration no.[], a company duly incorporated in accordance with the company laws
of the Republic of South Africa, with its registered office at [](Company).

2. RECORDAL
It is recorded that 2.1.

the Shareholders are the holders of all the issued shares in the Company;

2.2.

the Company conducts the Business as its core business, and the Shareholders hereby agree to
operate the Company and conduct the Business in accordance with this Agreement;

2.3.

the Shareholders in relation to their respective shareholding in and loan accounts against the
Company agree as set out herein; and

2.4.

[drafting note: further sub-clauses may be included which refer to joint venture/sale
agreements, etc].

3. DEFINITIONS AND INTERPRETATION


3.1.

In this Agreement, unless inconsistent with or otherwise indicated by the context the following
words and expressions shall have the meanings set out opposite them:
Business

the business of the Company which is to [insert


business of the Company] in all facets thereof;

Company

the company referred to in clause 1.6 (Parties);

Companies Act

the Companies Act 61 of 1973, as amended;

Law

the common law and any applicable Constitution,


statute, by-law, proclamation, regulation, rule, notice,

<insert name of firm>. Page 3 of 21

treaty, directive, code of practice, charter, judgment


or order having force of law in South Africa, and any
interpretation of any of them by any court or forum of
law;
Parties

the parties to this Agreement as contemplated in


clause 1, and any reference to a Party shall refer to
one of the relevant Parties as required by the
context;

Shareholders

the shareholders contemplated in clauses [1.1 to


1.5] (Parties);

Signature Date

the date of signature of this Agreement by the Party


signing last; and

the/this Agreement
3.2.

this shareholders agreement between the Parties.

This Agreement shall be interpreted according to the following provisions, unless inconsistent
with or otherwise indicated by the context

3.2.1.

the headings of clauses have been inserted for convenience only and shall not affect the
interpretation of this Agreement;

3.2.2.

any reference to one gender shall include the other gender and the neuter;

3.2.3.

words in the singular number shall include the plural and vice versa;

3.2.4.

references to a person shall include where the context so requires, an individual, firm,
company, corporation, juristic person, local authority, and any trust, organisation,
association or partnership, whether or not having separate legal personality;

3.2.5.

words defined in a specific clause have the same meaning in all other clauses of this
Agreement;

3.2.6.

if any definition in this clause 3 (Definitions and interpretation) contains a substantive


provision conferring rights or imposing obligations on any Party, effect shall be given to
such provision as if it was a substantive provision in the body of this Agreement; and

3.2.7.

the Parties agree that no provision or word used in this Agreement shall be interpreted to
the disadvantage of either Party because that Party was responsible for or participated in
the preparation or drafting of this Agreement or any part of it.

4. SHARE CAPITAL OF THE COMPANY

<insert name of firm>. Page 4 of 21

5. Unless otherwise agreed between all the Shareholders, neither the authorised, nor the issued
share capital of the Company shall be increased, reduced or otherwise changed, nor shall the
rights attaching to any shares or class of shares be changed in any manner, except as set out
herein.
6. Any new shareholder shall only be admitted to the Company upon the approval of all
Shareholders of such admission, which approval shall not be unreasonably withheld.
7. The Parties agree that the Shareholders shall, as soon as possible after the Signature Date, hold
the shareholding in the Company, as set out hereunder, which shall be achieved either by means of
the transfer of shares already issued at the Signature Date, or by means of the issue of new shares
in the Company, as soon as possible after the Signature Date, which transfer or issue of shares, as
the case may be, shall be effected against payment of [the share value / nominal value] [adapt as
necessary] to either the transferee or the Company, as the case may be:
8. [Shareholder 1 [%] shareholding].
9. [Shareholder 2 [%] shareholding].
10. [Shareholder 3 [%] shareholding].
11. [Shareholder 4 [%] shareholding].
12. [Shareholder 5 [%] shareholding].
13. DIRECTORS1
14. Each of the Shareholders shall be a director of the Company, provided that a director shall be
required to resign as director when he is disqualified in terms of the Statutes of the Company or the
Companies Act to be a director or when a Party ceases to be a Shareholder.
15. Each of the Shareholders shall be obliged to vote in favour of the appointment of every other
Shareholder as director of the Company.
16. The directors of the Company shall elect a chairperson, who shall not have a second or deciding
vote on meetings of directors.
17. The remuneration of the directors of the Company in their capacities as such, shall from time to time
be determined by the Shareholders.
18. LOANS AND FUNDING

This section may need to be amended where a Shareholder is another entity, or a different regime is
required.

<insert name of firm>. Page 5 of 21

19. The capital needs of the Company (including both share capital and loan capital) from time to time
shall be decided by all the Shareholders of the Company by means of a [unanimous / majority]
decision.
20. Any decision of the Shareholders to finance the capital requirements of the Company by means of
loans by the Shareholders to the Company or by means of loans procured from financial institutions
or other third parties shall be subject to a [unanimous / majority] decision of all Shareholders
approving such loans at such terms and conditions as the Shareholders may unanimously approve.
Any decision of the Shareholders to finance the capital requirements of the Company by means of
loans procured from financial institutions or other third parties which are to be secured by
suretyships or guarantees to be given by all the Shareholders for the benefit of such financial
institution or other third party, shall be subject to a [unanimous / majority] decision of the
Shareholders approving and requiring such suretyships. Such suretyships, guarantees or
indemnities granted by the Shareholders, if approved as aforesaid, shall be subject to the provisions
of clause 6.4 and 6.5 of this Agreement
21. Should any Shareholder or Shareholders for whatever reason, including failure by the other
Shareholders to approve any proposed Shareholders loans or loans from third parties to the
Company as contemplated in clause 6.2, while the Company is in need of funds, and
notwithstanding the provisions of clause 6.1 and 6.2, contribute more than his pro rata share of any
shareholders loans to the Company, the amount of that excess outstanding from time to time shall 22. bear interest against the Company from the date on which it is advanced by the contributing
Shareholder until the date of repayment to that Shareholder, at an annual rate equal the publicly
quoted prime overdraft lending rate charged by the Companys bankers from time to time, unless
the parties to such loan agree otherwise;
23. be repaid by the Company to the contributing Shareholder before any other Shareholders' loans are
repaid, or any dividends are declared to any Shareholder, unless the Shareholder or Shareholders
who have contributed more than their pro rata share of loans to the Company, have agreed to a
different arrangement in respect of the repayment or part-repayment of any such loans or the
declaration of such dividends; and
24. be repayable on such terms as the contributing Shareholder and the Company have agreed to, and
in the absence of any specific agreement to that effect, be repayable on demand.
24.1.

If any suretyship, guarantee or indemnity is required of the Shareholders for the purposes of
any loan to the Company or for the purpose of any transaction to be entered into by the
Company, and provided that the same is also approved by the Shareholders as contemplated in
clause 6.1 and 6.2, then the Shareholders shall bind themselves jointly and severally for this
purpose on behalf of the Company unless otherwise agreed to by them in writing.

<insert name of firm>. Page 6 of 21

24.2.

If any suretyship, guarantee or indemnity (which is approved as contemplated in clauses 6.1


and 6.2 is given on behalf of the Company by any one or more of the Shareholders but not by
all the Shareholders, then the Shareholders shall be liable inter se in respect of such suretyship,
guarantee or indemnity in proportion to their respective shareholding in the Company at the time
of payment under the suretyship, guarantee or indemnity.

24.3.

Subject to clause 6.3, none of the Shareholders shall be entitled to demand the repayment of
shareholders loans by the Company to any Shareholder, without the consent of the other
Shareholders.

24.4.

Notwithstanding any other provisions of this Agreement, no Shareholder's shares or any portion
thereof shall be ceded or transferred to anybody else without a proportionate share of that
Shareholder's loan account against the Company being ceded to such other person and no
Shareholder's loan account against the Company or any portion thereof shall be ceded to
anybody else without transfer of that Shareholder's shares or proportionate part of such shares
being transferred to such other person. The provisions of this clause 6.7 shall not apply to that
portion of the loan account which is more than the Shareholders pro rata share of any loan to
the Company, as contemplated in clause 6.3.

24.5.

The provisions of 6.3 and 6.6 shall apply irrespective of the manner in which, or the reasons for
the coming into being of a credit loan account.

24.6.

Should any Shareholder have a debit loan account with the Company, such debit loan account
shall, subject to any written agreement or [unanimous / majority] resolution by the
Shareholders of the Company as contemplated in clauses 6.1 and 6.2, be repayable when such
Shareholder ceases to be a Shareholder, and such amount shall at all times bear interest until
the date of repayment at the rate contemplated in 6.3.1. Such debit loan account shall
furthermore be payable by the Shareholder concerned on demand of the Company, unless the
Company has approved any other terms and conditions to be applicable to such debit loan
account.

24.7.

The Shareholders may agree from time to time to lend and advance amounts to the Company
on terms and conditions which may differ in any respect to the terms and conditions set out in
this clause 6.

25. BANK ACCOUNT AND SIGNING POWER


25.1.

All amounts received by or on behalf of the Company shall be paid into a bank account as
determined by the directors and all payments, excluding payments of a petty cash nature shall
be made from this account (the Company Bank Account).

<insert name of firm>. Page 7 of 21

25.2.

All payments made by or on behalf of the Company, excluding payments of a petty cash nature,
shall be made by means of a cheque drawn on the Company Bank Account or electronic
transfer.

25.3.

All cheques drawn on the Company Bank Account, must be signed by any 2 (TWO) directors,
and any electronic transfer must be authorised by at least 2 (TWO) directors, unless the
Shareholders decide otherwise, which decision may include an authority matrix2 in respect of
agreements and payment authorisations which only require the signature of one of specifically
designated directors.

25.4.

Notwithstanding any provision to the contrary, the directors of the Company shall only be
entitled to incur liabilities and make payments on behalf of the Company in accordance with the
Company's approved budget as determined by the Shareholders from time to time. The
Shareholders may also from time to time approve an authority matrix authorising specific
directors to act on behalf of and bind the Company in respect of specific categories of
transactions.

26. FINANCIAL ADMINISTRATION AND FINANCIAL STATEMENTS


27. The Company shall keep such books and records of all transactions, dealings and affairs of the
Company as the directors may from time to time determine and require, and all transactions of the
Company shall be recorded in accordance with generally accepted accounting practice.
28. The books and records contemplated in clause 8.1 29. shall be kept by the Companys auditors or on the property where the main business of the Company
is conducted;
30. are accessible at all times to each Shareholder; and
31. may be, upon a Shareholder ceasing from being a shareholder of the Company, insofar as he or she
still has an interest thereto, perused under supervision of a Shareholder or representative of the
Company, by the former Shareholder, the executor of his estate where applicable, or an attorney or
auditor authorised thereto in writing.
32. The directors must ensure, as soon as possible after the end of each financial year, the final
statements of the Company are prepared in accordance with generally accepted accounting practice
by the auditors of the Company.
33. The financial year of the Company shall commence on [] of each year and shall end on the last day
of [] of the following year.
2

This provides for the adoption of a decision or authority matrix in terms of which decision-making,
protective provisions and authorities can be dealt with from time to time.

<insert name of firm>. Page 8 of 21

34. The auditors shall, as soon as possible after the end of the financial year of the Company, prepare
financial statements for the Company and present them to the Shareholders for their approval. A
copy of the financial statements must be supplied to each Shareholder as soon as possible after the
statements have been finalised, and after it has been approved as contemplated in this clause 8.5, it
will be final and binding on all the Shareholders of the Company, unless a Shareholder has given
notice of a mistake as contemplated in clause 8.6, in which instance the provisions of clauses 8.6
shall apply.
35. If any Shareholder is of opinion that mistakes have occurred in the financial statements of the
Company, such Shareholder shall be entitled to, within 1 (ONE) month after receiving a copy of the
financial statements, by means of a written notice which sets out the mistake and the intended
amendment, bring the mistake under the attention of the other Shareholders and the auditors of the
Company. If such mistake is the subject of a dispute between the Shareholders, such dispute may be
referred by any Shareholder for arbitration in terms of clause 19 (Dispute Resolution) within 7
(SEVEN) days from the date such Shareholder has given notice as contemplated in this clause 8.6.
36. The financial statements shall be final and binding on all the Shareholders as soon as they are
accepted as correct as contemplated in clause 8.5 or if no notice of a mistake was given in terms of
8.6. If notice was given in terms of clause 8.6, the financial statements will become final after the
amended financial statements are approved, for which purpose the provisions of clauses 8.5 and 8.6
shall again mutatis mutandis apply, or in the absence of agreement, after and in accordance with the
final settlement of the dispute in terms of clause 19 (Dispute Resolution), provided the dispute was
referred for arbitration within the 7 (SEVEN) days period referred to in clause 8.6.
37. DIRECTORS REMUNERATION AND DIVIDENDS
38. The remuneration of directors of the Company (and any criteria used to determine performance
and other bonuses payable to directors) shall from time to time be determined by a [normal
majority / unanimous] vote of Shareholders.
39. The dividend policy of the Company shall from time to time be determined by a [normal
majority / unanimous] vote of Shareholders.
[Optional clauses]
40. Notwithstanding any provision to the contrary contained in this Agreement, all the Shareholders
involved in the Business of the Company, whether in the capacity as employee or director of the
Company, are entitled to reasonable compensation for services rendered. The refusal or failure by
the Company to reasonably remunerate or compensate a Shareholder may be referred to dispute
resolution by the Shareholder so affected in terms of clause 19 (Dispute Resolution), and for which
purposes the arbitrator shall be compelled to take into account the amount of such Shareholder's

<insert name of firm>. Page 9 of 21

contribution to the Business of the Company, and specifically to take into account the financial and
cash flow position of the Company, when making his/her decision.
41. MANAGEMENT AND MEETINGS
42. All resolutions of directors and Shareholders meetings shall be adopted by a normal majority vote
unless a unanimous vote of Shareholders or directors (as the case may be) in favour of any such
resolution is required in terms of this Agreement, calculated in terms of shareholding of those
directors or Shareholders present at a meeting complying with the relevant quorum requirements.
9.2.

A quorum for a meeting of directors or Shareholders of the Company shall be constituted by


directors or Shareholders holding at least [] % of the issued ordinary shares in the Company
and which shareholding accordingly represents [] % of all voting rights in respect of the
Company.

43. Insofar as any of the provisions of this Agreement require that a decision by the Shareholders
shall be taken by a prescribed majority of all the Shareholders, or requires the unanimous consent
of all Shareholders, as the case may be, this shall be interpreted to mean all Shareholders and
not only those Shareholders present at a meeting which complies with the quorum requirements
as set out in 10.2. Any other decision of Shareholders referred to in this Agreement, will be taken
as set out in 10.1, unless specifically provided otherwise.
44. Unless otherwise provided in terms of this Agreement, the provisions of the Companies Act shall
apply in respect of all meetings held by Shareholders or directors of the Company, including but not
limited to, the postponement of any meeting to obtain a quorum, notices, agendas and minutes of
meetings.
45. The Shareholders shall, subject to any provision to the contrary in the Companies Act, be entitled to
meet by means of any form of distant communication, including telephone, fax, electronic
communication or otherwise.
46. BINDING NATURE OF THIS AGREEMENT AND ENDORSEMENT OF SHARE CERTIFICATES
47. No transfer of shares in the Company shall be effected before such transferee binds himself in writing
to the terms and conditions of this Agreement.
47.1.

Notwithstanding any provision to the contrary, this Agreement binds the Shareholders and the
Company and shall remain binding, notwithstanding any change in each of the Shareholders
respective shareholding in the Company, after Signature Date.

47.2.

The Parties agree, if requested by any of the Shareholders, that the share certificates in respect
of all shares in the Company shall be endorsed as follows:

<insert name of firm>. Page 10 of 21

"The shares are subject to the provisions of the shareholders agreement of the
Company from time to time, and lodged with the Company's auditors."
47.3.
47.3.1.

In order to ensure compliance with the provisions of this Agreement the Shareholders shall be obliged to have their share certificates endorsed by the Company
in the manner contemplated in 11.3 if requested by any Shareholder as contemplated in
clause 11.3;

47.3.2.

each Shareholder shall be obliged to lodge the share certificates in respect of its shares with
the auditors of the Company, in trust; and

47.3.3.

a copy of this Agreement shall be lodged with the Company's auditors, where it shall be
available for inspection by any Shareholder or his/her nominee, during business hours.

48. INDEMNITY
48.1.

Should any Shareholder cease to be a shareholder of the Company (the Outgoing


Shareholder), then the remaining Shareholders (the Remaining Shareholders) shall be
compelled to take all steps that may be required to ensure that the Outgoing Shareholder (or his
deceased estate if applicable) is released from all liability with relation to any suretyship,
guarantee or any other act whereby security was given on behalf of the Company for the benefit
of any person for any liability of the Company, and if such steps do not cause such release, the
Remaining Shareholders hereby indemnify the Outgoing Shareholder against such liability,
unless the Outgoing Shareholder ceased to be a shareholder as a result of the circumstances
contemplated in clause 14.1.3.

48.2.

The Outgoing Shareholder hereby indemnifies the Remaining Shareholders and the Company
against any claim, loss or damage which may be instituted or claimed against the Remaining
Shareholders and/or the Company to the extent that any negligent act performed by the
Outgoing Shareholder (or performed in his capacity as director of the Company, [or an act
performed by a director who was nominated to the Board of Directors by the Outgoing
Shareholder in terms of this Agreement]3) has caused such claim, loss or damage, but
excluding any act which was performed prior to the Outgoing Shareholder ceasing to be a
shareholder of the Company in respect of -

48.2.1.

agreements entered into with the approval of the other Shareholders, directors or the
Company, or entered into within the scope of and in accordance with the provisions of this
Agreement, or any act performed in the normal course of the Business of the Company
provided that such act was not performed in a way which is contrary to the provisions of this
Agreement; and

Insert if applicable.

<insert name of firm>. Page 11 of 21

48.2.2.

claims in respect of which the Company had insurance, up to the amount of compensation
paid pursuant to such insurance.

48.3.

The Company indemnifies each Shareholder in his/her capacity as employee of the Company in
respect of expenses incurred by such Shareholder as employee -

48.3.1.

in the proper and normal conducting of the Business of the Company; and

48.3.2.

in respect of anything done to preserve the business or property of the Company,


provided that such expenses were not incurred in a manner contrary to the provisions of this
Agreement.

48.4.

Each Shareholder hereby indemnifies the other Shareholders and the Company against any
liability, loss, damage or costs with relation to or as a result of a conscious transgression by such
Shareholder (including in his/her capacity as director of the Company, [or in respect of conduct
by a director nominated by the indemnifying Shareholder in terms of this Agreement]4) of
the Companies Act, or resulting from the reckless or negligent management or conducting of the
business of the Company by such Shareholder or director, or resulting from a breach of any of
the provisions of this Agreement by such Shareholder or director.

49. ARTICLES OF ASSOCIATION OF COMPANY


49.1.

The provisions of this Agreement shall, as between the Parties hereto, take precedence over the
provisions of the Articles of Association of the Company and shall bind all the Parties' successors
in title.

49.2.

To the extent that any provisions of the Articles of Association of the Company contradict with the
provisions of this Agreement-

49.2.1.

any of the Parties may require the Articles of Association of the Company to be amended
accordingly; and

49.2.2.

the Parties shall vote in favour of all resolutions of the Company necessary to so amend the
Articles of Association of the Company.

50. COMPULSORY SHAREHOLDER RESIGNATION AND LIQUIDATION


51. A Shareholder [(which shall for purposes of this clause 14 include also the director of Shareholder
nominated by such Shareholder)]5 shall be obliged to resign as employee and director of the
Company and sell his/her shares in and loan accounts against the Company to the other
Shareholders of the Company if 4
5

Insert if applicable.
Insert only if applicable. May need amendments for designated directors who are not Shareholders.

<insert name of firm>. Page 12 of 21

52. the Shareholder is guilty of misconduct which violates the highest degree of good faith and trust
between the Shareholders and/or the Company;
52.1.1.

the Shareholder is convicted of a criminal offence of which fraud or dishonesty is an


element;

52.1.2.

a Shareholder who is a natural person and who is obliged to also be a director of the
Company in terms of this Agreement or any applicable legislation, is disqualified from
being a director;

52.1.3.

the Shareholder being in breach of a material provision of this Agreement and failing to
remedy such breach after being notified to that effect by the Company, or being in breach
of this Agreement which is of such a nature that the other Shareholders can deduce
therefrom that the Shareholder cannot or will not adhere to the provisions of this
Agreement;

53. a Shareholder becomes permanently medically unfit to perform his/her duties as employee and
Shareholder of the Company and to make a substantial contribution to the Business of the
Company (which condition, upon failure to reach agreement on whether or not such Shareholder
is in fact medically unfit, shall be determined by a medical practitioner appointed by the Company,
or where such appointment is disputed, appointed in terms of clause 19 (Dispute Resolution), or
is declared as such by a competent court), with effect from the first calendar day of the calendar
month following the calendar month in which it was agreed or found such Shareholder is
medically unfit; or
54. a Shareholder reaches the age of 65 (SIXTY FIVE) in which event he/she shall also cease to be a
director of the Company with effect from the last calendar day of the financial year of the Company in
which such Shareholder became 65 (SIXTY FIVE); or
[optional]
55. the majority of all the Shareholders of the Company resolves and approves any other agreement
between the Shareholders and/or the Company, that all the shares held by a particular
Shareholder or Shareholders in the Company (the Outgoing Shareholder(s)) are to be
acquired by the other Shareholders (the Remaining Shareholders) and accordingly requires
the resignation of the Outgoing Shareholder(s) as director(s) of the Company, with effect from the
first calendar day of the calendar month following the calendar month in which the resolution
contemplated in this clause 14.1.3 has been passed.
56. If a Shareholder or Shareholders are obliged to sell their shares and resign as director and
employee of the Company (the Outgoing Shareholder), as contemplated in clause 14.1 such
Shareholders shall be deemed to have offered their total interest in the Company, including all
loan accounts which such Shareholders may have against the Company, for sale to the remaining

<insert name of firm>. Page 13 of 21

Shareholders of the Company (the Remaining Shareholders) at a purchase price determined


in accordance with and such other terms and conditions as contemplated in clause 17 (Valuation
of shares and loan accounts).
57. VOLUNTARY RESIGNATION
58. Any Shareholder ("the Retiring Shareholder") may at any time retire from the service of the
Company with at least [] calendar months prior written notice to the other Shareholders ("the
Remaining Shareholders") or the Company, in which event the Retiring Shareholder shall be
deemed to have offered his/her shares in and loan accounts against the Company for sale to the
Remaining Shareholders and shall be deemed to have resigned as a director of the Company in
accordance with this clause 15 with effect from the first calendar day of the calendar month
following the calendar month in which he or she has give notice in terms of this clause 15.1.
59. The Remaining Shareholders are, in the instance contemplated in clause 15.1, obliged to purchase
the Retiring Shareholders shares in the Company at a purchase price determined in accordance
with and such other terms and conditions contemplated in clause 17 (Valuation of shares and
loan accounts), subject to any other agreement between the Shareholders inter se (or only some
of them) and/or the Company. The Remaining Shareholders shall be entitled to only acquire the
Outgoing Shareholders shares in the Company without acquiring his or her loan accounts against
the Company, as they may decide in their discretion, in which event the loan accounts shall be
dealt with in accordance with the provisions of clause 17 (Valuation of shares and loan accounts).
60. DEATH OF A SHAREHOLDER
61. Upon the death of any Shareholder ("the Deceased Shareholder"), the Deceased Shareholder shall
be deemed to have, simultaneously with his/her death, offered his/her entire shareholding in and loan
accounts against the Company for sale to the Remaining Shareholders with effect from the first
calendar day of the calendar month following the calendar month in which the Deceased Shareholder
passed away.
62. For the purpose of the purchase contemplated in clause 16.1, the provisions of clause 15
(Voluntary resignation) shall apply mutatis mutandis, subject thereto that any reference to the
Retiring Shareholder shall be deemed to be a reference to the executor of the Deceased
Shareholders estate.
63. VALUATION OF SHARES AND LOAN ACCOUNTS 6
64. The purchase price of the shares of the Company and Shareholders loan accounts for purposes of
clause 14 (Compulsory Shareholder resignation and liquidation), 15 (Voluntary resignation) and 16
(Death of a Shareholder) shall be -

Other more detailed methods of valuation may be included.

<insert name of firm>. Page 14 of 21

65. in respect of shares, the value which is determined by means of a [unanimous/majority]


resolution adopted by all Shareholders, and in the absence whereof the value of the shares of the
Company shall be the net asset (market) value thereof [including goodwill]; and
66. in respect of loan accounts, the book value thereof.
67. The purchase price of the shares for purposes of clause 14 (Compulsory Shareholder resignation
and liquidation), 15 (Voluntary resignation) and 16 (Death of a Shareholder) shall, unless the
Shareholders inter se and/or the Company have agreed otherwise, be payable in 60 (SIXTY)
equal monthly instalments (including capital and interest), of which the first instalment shall be
payable on or before the last day of the calendar month in which the sale of the relevant shares in
the Company takes effect as provided in terms of clauses 14 (Compulsory Shareholder resignation
and liquidation), 15 (Voluntary resignation) or 16 (Death of a Shareholder) as the case may be, and
thereafter monthly on or before the last day of each consecutive calendar month. 7 The
outstanding capital amount from time to time shall bear interest at an annual rate equal to the
prime overdraft lending rate from time to time charged by the Company's bankers, minus []%,
calculated from the first day of the calendar month during which the first instalment is payable
until the capital amount has been settled in full.
68. In the event of a Shareholders shares being acquired by the Remaining Shareholders in terms of
clauses 14 (Compulsory Shareholder resignation and liquidation), 15 (Voluntary resignation) or 16
(Death of a Shareholder) without the Remaining Shareholders also acquiring such Shareholders
credit loan account against the Company as contemplated in clauses 14 (Compulsory Shareholder
resignation and liquidation), 15 (Voluntary resignation) or 16 (Death of a Shareholder) as the case
may be, then such loan shall be repayable by the Company to such Shareholder on or before
expiry of the 60 (SIXTY) month period referred to in clause 17.2 and it shall bear interest as
contemplated in clause 6.3.1 (Loans and funding). The interest shall be payable on or before the
last day of a calendar month for the duration of the loan.
69. GENERAL OBLIGATIONS OF SHAREHOLDERS AND DIRECTORS.
69.1.
69.1.1.

Each Shareholder/director (as the context requires) shall present immediately, if so requested, a full and accurate record of all business,
transactions or affairs of the Company or which have bearing on the Company, with which
that Shareholder is or was involved;

69.1.2.

avoid a conflict of interest with the Company, and shall immediately disclose any conflict
of interest with the Business of the Company or the Company itself, to the other directors;

69.1.3.

at all times act towards his fellow Shareholders and the Company with the highest degree
of good faith and integrity;

Different repayment terms may be included.

<insert name of firm>. Page 15 of 21

69.1.4.

regard all aspects and matters in relation to the Companys Business, including any
documentation in which the Company may have an interest, and specifically with regard
to clients of the Company, as confidential and that the publication thereof to third persons,
with the exclusion of the Companys auditors, may substantially harm the Company, with
the exclusion of documents and information which is public knowledge or with regard to
matters, the publication of which has been authorized by the directors of the Company.

69.2.
69.2.1.

No Shareholder/director (as the context may require) shall bind the Company as surety, issue any guarantee on behalf of the Company or indemnify
any person by the Company;

69.2.2.

allow anything to happen which results in the Companys property being seized;

69.2.3.

cede, pledge or in any way burden or allow any of the assets of the Company to be
burdened; and/or

69.2.4.

alienate his/her shares in and loan accounts against the Company, otherwise than in
accordance with the provisions of this Agreement,
without the prior consent of all Shareholders by means of a decision taken at a Shareholders
meeting.

70. DISPUTE RESOLUTION


70.1.

In the event of any dispute or difference arising amongst the Parties with regard to the
interpretation, implementation or enforcement of this Agreement, or as to whether or not this
Agreement has been terminated or is void or voidable and/or any other difference or dispute
relating to or arising from this Agreement or the enforcement thereof, then such dispute or
difference will be referred to arbitration before an arbitrator appointed by and in accordance
with such rules and procedures of arbitration as may be determined by and in accordance
with the Arbitration Foundation of Southern Africa ("the Arbitration Foundation"), provided
that the arbitrator appointed by the Arbitration Foundation must be permanently residing in
[insert city/town].

70.2.

Notwithstanding anything to the contrary or stipulated by the Arbitration Foundation, the


arbitration will be held in [insert city/town] with a view to achieving an expeditious result and
the arbitration will be conducted in camera, the Parties and the participants in the arbitration
being obliged to maintain the utmost confidentiality with regard to all matters relating thereto
or arising therefrom, save as otherwise expressly and peremptorily required by Law.

<insert name of firm>. Page 16 of 21

70.3.

Notwithstanding the provisions of this clause 19 (Dispute Resolution), any Party shall be
entitled to approach a competent court of law having jurisdiction to obtain any urgent relief
which may be required by such Party

71. JURISDICTION
The Parties consent to the jurisdiction of the [insert Province] Provincial Division of the High
Court with regard to any matter which may be referred to a court of law in terms of this
Agreement.
72. MISCELLANEOUS
72.1.

No Party shall, without the prior written approval of the other Parties assign, cede, delegate,
transfer or otherwise dispose of any right or obligation under this Agreement to any other
person.

72.2.

No provision of this Agreement (including, without limitation, the provisions of this clause) may
be amended, substituted or otherwise varied, and no provision may be added to or
incorporated in this Agreement, except (in any such case) by an Agreement in writing signed
by the duly authorised representatives of the Parties.

72.3.

Any relaxation, indulgence or delay (collectively referred to as Indulgence) by either Party


in exercising, or any failure by either Party to exercise, any right under this Agreement shall
not be construed as a waiver of that right and shall not affect the ability of that Party
subsequently to exercise that right or to pursue any remedy, nor shall any Indulgence
constitute a waiver of any other right (whether against that Party or any other person).

72.4.

The waiver of any right under this Agreement shall be binding on the waiving Party only to the
extent that the waiver has been reduced to writing and signed by the duly authorized
representative(s) of the waiving Party.

72.5.

This Agreement supersedes all prior representations, communications, negotiations and


understandings between the Parties concerning the subject matter of this Agreement.

72.6.

Whenever possible, each provision of this Agreement shall be interpreted in a manner which
makes it effective and valid under applicable Law, but if any provision of this Agreement is
held to be illegal, invalid or unenforceable under applicable Law, that illegality, invalidity or
unenforceability shall not affect the other provisions of this Agreement, all of which shall
remain in full force.

72.7.

This Agreement may be executed in any number of identical counterparts, all of which when
taken together shall constitute one Agreement. Any single counterpart or a set of counterparts

<insert name of firm>. Page 17 of 21

taken together which, in either case, are executed by the Parties shall constitute a full original
of this Agreement for all purposes.
72.8.

All notices and any other communications whatsoever (including, without limitation, any
approval, consent, demand, query or request) by either Party in terms of this Agreement or
relating to it shall be given in writing, and shall be sent by registered post, or delivered by
hand, or transmitted by facsimile or electronic mail to the recipient Party at its relevant
address set out below:

72.8.1.

if to [x], at:
Address:
Postal address:
Facsimile number:
Electronic mail address:
Marked for the attention of:

72.8.2.

if to [x], at:
Address:
Postal address:
Facsimile number:
Electronic mail address:
Marked for the attention of:

72.8.3.

if to [x], at:
Address:
Postal address:
Facsimile number:
Electronic mail address:
Marked for the attention of:

72.8.4.

if to [x], at:
Address:
Postal address:
Facsimile number:
Electronic mail address:
Marked for the attention of:

72.8.5.

if to [x], at:
Address:

<insert name of firm>. Page 18 of 21

Postal address:
Facsimile number:
Electronic mail address:
Marked for the attention of:
72.9.

Either Party may, by written notice to the other Party, change any of the addresses at which,
or the designated person for whose attention those notices or other communications are to be
given.

72.10. Any notice or other communication given by any Party to the other Party which
72.10.1.

is sent by registered post to the addressee at its specified address shall be rebuttably
presumed to have been received by the addressee on the 7th (SEVENTH) day after the
date of posting; or

72.10.2.

is delivered by hand during the normal business hours of the addressee at its specified
address shall be rebuttably presumed to have been received by the addressee at the time
of delivery; or

72.10.3.

is transmitted by facsimile copier to the addressee at the addressees specified facsimile


number shall be rebuttably presumed to have been received by the addressee on the
date of transmission as indicated on the senders facsimile transmission report; or

72.10.4.

is transmitted by electronic mail to the addressee at the addressees specified electronic


mail address shall be rebuttably presumed to have received by the addressee on the date
of transmission as reflected on the senders electronic mail records.

72.11. The Parties choose their respective physical addresses in clause 21.8 as their respective
domicilia citandi et executandi at which all documents relating to any legal proceedings to
which they are a party may be served. If that address is changed to another address which is
not a physical address in the Republic of South Africa, then the original address shall remain
the domicilium citandi et executandi of the relevant Party until it nominates a new physical
address within the Republic of South Africa in writing, to be its new domicilium citandi et
executandi.
72.12. The Parties agree to perform, or procure the performance, of all further things, and execute
and deliver (or procure the execution and delivery) of all further documents, as may be
required by Law or as may be desirable or necessary to implement or give effect to this
Agreement and the transactions contemplated therein.

<insert name of firm>. Page 19 of 21

Thus done and signed at..........................................on this............day of............................20..........

As witnesses:

________________________________

For and on behalf of


[SHAREHOLDER 1]
by

________________________________
_____________________________
who warrants his/her authority
hereto

Thus done and signed at..........................................on this............day of............................20..........

As witnesses:

________________________________

For and on behalf of


[SHAREHOLDER 2]
by

________________________________
_____________________________
who warrants his/her authority
hereto
73.

<insert name of firm>. Page 20 of 21

Thus done and signed at..........................................on this............day of............................20..........

As witnesses:

________________________________

For and on behalf of


[COMPANY]
by

________________________________
_____________________________
who warrants his/her authority
hereto

<insert name of firm>. Page 21 of 21