Risks
There are also certain risks which can be associated with putting a shareholders' agreement in place in some countries.
- In some countries, using a shareholders' agreement can constitute a partnership, which can have unintended tax consequences, or result in liability attaching to shareholders in the event of a bankruptcy.
- Where the shareholders' agreement is inconsistent with the constitutional documents, the efficacy of the parties' intended arrangement can be undermined.
- Countries with notarial formalities, where notarial fees are set by the value of the subject matter, parties can find that their agreement is subject to prohibitively high notarial costs, which, if they fail to pay, would result in the agreement being unenforceable.
- In certain circumstances, a shareholders' agreement can be put forward as evidence of a conspiracy and/or monopolistic practices.
Read more about this topic: Shareholders' Agreement
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