As a business owner, it`s important to understand the types of agreements that your company may enter into. Two common legal agreements are the unanimous shareholders agreement (USA) and the shareholders agreement (SA). Although they may sound similar, these two agreements have distinct differences.

What is a Unanimous Shareholders Agreement?

A unanimous shareholders agreement (USA) is a legal document that governs the relationship between all shareholders of a company. It is called « unanimous » because all shareholders must agree to its terms and conditions. This agreement specifies the rights and obligations of shareholders, outlines how decisions are made, and sets out procedures for resolving disputes.

The USA is often used for private companies where there are few shareholders or where one or more shareholders hold a significant stake in the company. It creates a framework for decision-making that allows all parties to work together harmoniously and avoid potential conflicts.

What is a Shareholders Agreement?

A shareholders agreement (SA) is similar to a USA, but it doesn`t require unanimous agreement from all shareholders. It`s a contract between two or more shareholders that outlines their rights and responsibilities regarding the ownership and operation of a company. It usually covers topics such as decision-making, management, and control of the company, dividend distribution, and dispute resolution.

The SA is designed to provide protection and clarity for shareholders, as well as set out the rules of the game for the company`s management. It`s common for public companies to use this type of agreement, as there can be a large number of shareholders with differing interests.

Key Differences Between USA and SA

The primary difference between the USA and SA is the requirement for unanimous agreement. USA requires that all shareholders agree to its terms, while SA only requires agreement from the parties involved in the contract. This means that the USA is often used for small private companies where there are few shareholders, while the SA is commonly used for larger public companies where there are many shareholders.

Another key difference is that the USA is a more comprehensive agreement that covers all shareholders, while the SA is often limited to only the shareholders who sign the agreement. This means that the USA covers a broader range of topics than the SA.

Finally, the USA is a more difficult agreement to modify or terminate since all shareholders must agree to any changes. The SA, on the other hand, can be modified or terminated with the agreement of the parties involved.

Conclusion

In summary, the main difference between the unanimous shareholders agreement (USA) and shareholders agreement (SA) is the requirement for unanimous agreement. The USA requires that all shareholders agree to its terms, while the SA only requires agreement from the parties involved in the contract. The USA is used for private companies with few shareholders, while the SA is more commonly used for public companies with many shareholders. Both agreements serve important roles in protecting shareholders and providing clarity in the management of a company.