When equity holders begin a process of partial or total sale of equity in Brazil, it is essential that its corporate structure is organized.
Among the main legal instruments of this structure is the Shareholders’ Agreement, a Brazilian law document signed between the participants of a company.
This Agreement must establish the rules on the management and continuity of the company, such as: (i) distribution of profits, (ii) reinvestment rules; (iii) participation of shareholders in the business; (iv) rules for administration; (v) drag along; (vi) tag along; (vii) policy of non-competition and non-enticement of customers and/or employees; (viii) confidentiality; (ix) succession policy, among many other sensitive points personalized for each company.
In Brazil the Agreement is a confidential document, that are of interest only to shareholders, with no need to register at the Commercial Board for the parties to demand compliance with the obligations established in the Agreement, unlike what happens with the Articles of Association. The Agreement is, therefore, a safe and confidential instrument in which shareholders can dispose of their interests in an unrestricted manner.
The company may even have more than one Agreement. It is possible, for example, to establish an Agreement for minority shareholders, and others for majority shareholders. Or, alternatively, an agreement for each family nucleus, when we talk about family businesses.
The Agreement is essential for the governance structure, bringing more security and certainty for shareholders, and transparency for potential investors/buyers, when the management and relationship rules between shareholders are clear and objective, especially with regard to the disposal of partner participation.
