We advised a car dealer on negotiating a shareholders’ agreement. The key areas were:
Share allocation
We negotiated the allocation of shares so the client’s ownership reflected their capital contribution and the other value they brought to the business, and set out how new shares would be issued and how that would affect existing shareholders.
Voting rights
We advised on how voting power is distributed, especially for major decisions such as selling the company, changing the nature of the business or taking on significant debt, and helped the client negotiate terms that gave them control over those decisions.
Board composition
The agreement defines who sits on the management board, how members are appointed and what their responsibilities are. This was crucial for the client to keep influence over the dealership’s day-to-day operations and long-term strategy.
Dividend policy
We established a clear policy for distributing profits, including how and when dividends are paid, so the client receives a fair share of the dealership’s profits.
Exit clauses
We negotiated buy-out provisions, including a right of first refusal and drag-along and tag-along rights. These protect the client if other shareholders want to sell, or if the dealership is sold to a third party.
Non-compete and confidentiality
To protect the dealership’s trade secrets and market position, the agreement includes non-compete clauses that prevent shareholders from running competing businesses, together with confidentiality obligations.
The result is a shareholders’ agreement that supports stable governance, financial fairness and future growth while limiting the client’s risk.