Perhaps the best way of defining shareholder agreement would be to classify it as a set of points within the framework of which two parties decide to do business. Its a key for every company which ensures their smooth functioning. It is a very vital element and is mandatory for shareholders to have. After all it is a must for frictionless functioning of any enterprise.


Well, shareholder agreement contains matters related to the ownership of the business among the partners. It also has the principles around which the company functions as well as individual agreements which has such informations like sharing of profits, stakes that partners have in the organisation etc. It goes a long in preventing the partners from disagreements and fall outs.

Whether the enterprise has two partners or many the importance of shareholder agreement remains the same. In instances when one or more than one partner walks out of the partnership, it is the shareholder agreement that prove to be the most reliable factor in effecting the changes to the partnership. Broadly speaking, shareholder agreement is an agreement within the framework of law aimed at smooth functioning of the organisation.

Above description clearly indicates the value of shareholder agreement. No doubt that such a thing requires a complete secrecy as it contains some very sensitive information about the partners as well as the organisation. What is even more heartening is the fact that the preparation, revision and termination of shareholder agreement costs far less than several other company agreement. All the more reason why one must go for one.

The value of a shareholder agreement, thus, can clearly be understood and it can be said that one can afford to overlook it at the price of one's own discomfiture and peace of mind.