A shareholder agreement is a legal document that outlines the rights and responsibilities of shareholders in a corporation. It serves to protect the interests of shareholders and establish rules for the management and operation of the company.

Characteristics:
– Ownership Structure: Defines the percentage of ownership each shareholder has in the company.
– Voting Rights: Specifies how voting rights are allocated among shareholders and the process for making decisions.
– Transfer of Shares: Outlines the conditions under which shares can be sold or transferred, including any right of first refusal for existing shareholders.
– Dispute Resolution: Provides mechanisms for resolving disputes between shareholders, such as mediation or arbitration.
– Exit Strategy: Details the process for exiting the business, including buyout provisions and valuation methods.

Examples:
– A shareholder agreement may stipulate that if a shareholder wishes to sell their shares, they must first offer them to the other shareholders at a predetermined price.
– The agreement might include a clause that requires unanimous consent for major business decisions, such as mergers or acquisitions, ensuring that all shareholders have a say in significant changes.