In the business world, share ownership contracts are very important, especially in a limited liability company (PT) structure.
This contract regulates the rights and obligations of shareholders, which are individuals or legal entities that own shares in a PT.
By owning shares, a shareholder is deemed to own part of the company, and therefore has certain rights such as attending general meetings of shareholders (GMS) and receiving dividends.
However, share ownership is more than just proof of ownership; the legal aspects involved are also important to protect the interests of shareholders.
Therefore, when offering shares to investors or other parties, having a clear and detailed share ownership contract is crucial.
The following will explain the provisions and functions of a share ownership contract and the matters regulated in it.
What is a Share Contract?
A shareholding contract, or more commonly known as a Shareholders Agreement, is an agreement made by the parties establishing a PT to regulate the rights and obligations of shareholders.
Ideally, this agreement is made as early as possible when the PT is established.
This contract regulates the rights and obligations of shareholders, dividend distribution, voting rights, transfer of shares, and other aspects that govern the relationship between shareholders.
In addition, this contract can be used as a reference in case of misunderstandings or disputes between shareholders.
How Important are Share Contracts?
As a business grows, it often requires additional parties to help sustain the business, including additional capital.
For PT businesses, investors are more confident in investing capital because of the clear structure and division of responsibilities.
Investors usually request a share ownership contract to regulate their rights as shareholders in the PT.
This agreement is likened to a marriage certificate between business people, where the agreement is binding and regulates the work, responsibilities of each shareholder, rights obtained, and settlement when a shareholder leaves.
With this agreement, shareholders have a reference in resolving disputes that may arise.
In addition, when a business secures funding from venture capital or angel investors, they will become shareholders and usually have the right to determine the members of the board of directors and require the original founders of the PT to remain in the PT for a certain period of time.
What does a Share Ownership Contract contain?
A share ownership contract is made based on the agreement of the parties and must comply with the law, decency, and public order.
The following are common matters that are usually stipulated in this agreement:
1. Business Plan
Shareholding contracts generally include a description of the business plan, in which shareholders must provide advice or views to the board of directors.
The board of directors is obliged to create a business plan that must be approved by the shareholders.
In addition, the agreement stipulates the shareholders’ obligation to provide additional funds when the company reaches a certain point.
2. Pre-emptive Rights
When a company raises capital by issuing new shares, it must grant pre-emptive rights to existing shareholders.
This allows existing shareholders to retain their shareholding percentage.
If this right is not exercised, the shares can be offered to new investors.
The exercise of this right is regulated in Article 43 of the Company Law.
This point is often found in the term sheet of venture capital or angel investors, and is important to note because the percentage of share ownership determines the voting rights of shareholders.
3. Company Management
The contract should include the management structure of the company and the responsibilities of each party.
This includes restrictions on the founder not to leave for a certain period of time or until the company reaches a certain point.
The contract should also stipulate the shareholders’ right to appoint or remove directors and the circumstances under which a director may be removed from office.
4. Share Transfer Restrictions
Share transfer restrictions are important to include in the contract as they set out the conditions if a shareholder transfers their shares to another party.
For example, it may require approval from members of the board of directors or an obligation to offer the transferred shares to other shareholders.
The Company Law regulates this limitation in Article 57 paragraph (1).
5. Dividend Policy
As a shareholder, the right to dividends is a given.
The dividend policy governs the use and distribution of dividends, including the decision whether profits will be distributed to shareholders or used to develop the business.
6. Share Classification and Voting Rights
This point regulates the types of shares and the rights granted to each shareholder.
The classification of shares is regulated in Article 53 paragraph (4) of the Company Law and includes various types of shares with voting rights, special rights, dividend rights, and rights to the remaining assets of the company.
7. Deadlock Conditions
Deadlock provisions are important to resolve disputes between shareholders, especially if there are two shareholders with the same shares.
Some common ways to resolve deadlocks include Russian Roulette, mediation, and Texas Shoot-out.
How to Create a Share Ownership Contract?
To create a valid share ownership contract, take note of the following steps:
1. Fulfill the Legal Terms of the Agreement
The share ownership contract must fulfill the legal requirements of the agreement according to Article 1320 of the Civil Code, namely the existence of an agreement, the competence of the parties, the clear object of the agreement, and the halal cause.
2. Created by Two or More People
This contract must be drawn up by at least two people who will become shareholders of the PT.
If there are new investors, the agreement can be amended accordingly.
3. Made Under Hand or Notarial Deed
This agreement can be made under hand or notarial deed.
A notarial deed has a higher standing as strong evidence in the event of a dispute.
4. Sets out the Rights and Obligations of the Parties
The contract should set out the rights and obligations of shareholders, including the business plan, pre-emptive rights, restrictions on transferring shares, dividend policy and deadlock provisions.
KH Contact
These are some of the things that must be considered in making a share ownership contract.
By paying attention to these things, the business and all shareholders will be legally protected.
To make it easier to make share ownership contracts and other agreements, trust Kontrak Hukum as a digital legal platform.
With Kontrak Hukum, you can make all business agreements in accordance with applicable law.
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