A Shareholders’ Agreement is a private agreement between the shareholders of a Hong Kong limited company. It is used to set out each party’s rights, obligations, and protections in more detail. It works alongside the Articles of Association, which are the company’s formal constitutional document. In Hong Kong, a private company’s articles must restrict share transfers, limit members to 50, and prohibit public share subscription.
A well-draftfied shareholders’ agreement usually covers:
It is also important to make sure the agreement is consistent with the company’s articles. In Hong Kong, articles can generally only be changed by special resolution. Also, Hong Kong companies follow a no-par value share regime, so outdated par value concepts should be avoided in drafting.
In short: a Shareholders’ Agreement helps prevent disputes, clarify control, and protect shareholder interests from the beginning.
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