What is a shareholder agreement?

A shareholder agreement is a legally binding contract between the shareholders of a corporation in Texas that outlines the terms and conditions of how the company is to be managed. It typically covers ownership and voting rights, decision-making protocols, dispute resolution, and restrictions on the transfer of shares. It is important for the protection of the shareholders because it ensures that everyone involved is in agreement and that no one is making decisions or taking actions that could adversely affect the corporation. The agreement also helps to avoid potential conflicts between shareholders as it stipulates the procedures that should be followed in the event of a disagreement. The agreement usually requires all shareholders to approve decisions, such as the sale of the company, the issuance of new shares, and the decision to merge with another corporation. Without an agreement, any of these decisions could be made by a single shareholder, potentially leaving other shareholders out of the decision-making process. A shareholder agreement also helps to make sure that shareholders are actively involved in decision-making, which can help the corporation remain profitable and successful.

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