Shareholder Agreement Pakistan

SHAREHOLDER AGREEMENT PAKISTAN

THIS SHAREHOLDER AGREEMENT (the "Agreement") is entered into as of this [Day] day of [Month], [Year] (the "Effective Date"), by and among:

1. [Company Name], a private limited company incorporated under the laws of the Islamic Republic of Pakistan, having its registered office at [Company Registered Address] (hereinafter referred to as the "Company", which expression shall unless repugnant to the context include its successors-in-interest and assigns); and
2. [Shareholder 1 Legal Name], son/daughter/wife of [Father's/Spouse's Name], holding Computerized National Identity Card (CNIC) No. [CNIC Number], residing at [Shareholder 1 Residential Address] (hereinafter referred to as "Shareholder 1"); and
3. [Shareholder 2 Legal Name], son/daughter/wife of [Father's/Spouse's Name], holding Computerized National Identity Card (CNIC) No. [CNIC Number], residing at [Shareholder 2 Residential Address] (hereinafter referred to as "Shareholder 2").

(Shareholder 1 and Shareholder 2 shall collectively be referred to as the "Shareholders" and individually as a "Shareholder").

RECITALS:

WHEREAS, the Company has an authorized share capital of [Total Authorized Capital] divided into [Number of Shares] ordinary shares of [Par Value Per Share] each, of which [Issued Share Capital] ordinary shares have been issued and are fully paid-up;

WHEREAS, the Shareholders are the legal and beneficial owners of the issued shares of the Company in the proportions set forth in Schedule A of this Agreement; and

WHEREAS, the Parties desire to define their respective rights, duties, and obligations as shareholders of the Company, to provide for the orderly management and governance of the Company, and to regulate the transfer of shares and the conduct of the business in accordance with the laws of the Islamic Republic of Pakistan, specifically the Companies Act, 2017.

NOW, THEREFORE, in consideration of the mutual covenants, promises, and undertakings set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:

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SECTION 1: OPERATIONAL DEFINITIONS

1.1 "Act" means the Companies Act, 2017 (Act XIX of 2017) promulgated by the Parliament of Pakistan, including any statutory modifications, re-enactments, rules, and regulations framed thereunder from time to time.

1.2 "Affiliate" means, with respect to any specified Person, any other Person that directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, such specified Person.

1.3 "Board" or "Board of Directors" means the board of directors of the Company constituted in accordance with the Act and this Agreement.

1.4 "Business Day" means a day (other than a Saturday, Sunday, or a public holiday declared by the Government of Pakistan) on which scheduled commercial banks are open for normal banking business in [City, Pakistan].

1.5 "Confidential Information" means all non-public information, data, trade secrets, financial records, client lists, software, business plans, and proprietary knowledge pertaining to the Company or any Shareholder, whether communicated in writing, orally, or in electronic format.

1.6 "Defaulting Shareholder" means a Shareholder who has committed a Material Breach of any provision of this Agreement.

1.7 "Fair Market Value" means the price at which a share would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or sell, as determined by an independent firm of chartered accountants registered in Pakistan appointed jointly by the disputing Shareholders.

1.8 "Material Breach" means a failure by a Shareholder to perform, observe, or comply with any material covenant, obligation, representation, or warranty contained in this Agreement or the Articles of Association of the Company.

1.9 "Person" means any individual, corporation, partnership, joint venture, association, joint-stock company, trust, unincorporated organization, limited liability company, or governmental authority.

1.10 "Right of First Refusal" or "ROFR" means the preemptive right of non-transferring Shareholders to purchase offered shares prior to any proposed transfer to a third party.

1.11 "SECP" means the Securities and Commission of Pakistan established under the Securities and Exchange Commission of Pakistan Act, 1997.

1.12 "Shares" means the ordinary shares, preference shares, or any other class of equity securities issued by the Company from time to time.

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SECTION 2: SUBSTANTIVE TERMS & OBLIGATIONS

2.1 Governance and Board Composition

(a) The management and administration of the business and affairs of the Company shall be vested in the Board. The Board shall consist of [Number] directors. (b) Shareholder 1 shall have the right to nominate [Number] directors to the Board, and Shareholder 2 shall have the right to nominate [Number] directors to the Board. (c) The quorum for meetings of the Board shall be [Number] directors, personally present or participating via video conferencing in compliance with applicable laws of Pakistan. (d) In the event of a tie on any resolution put to a vote at a meeting of the Board or general meeting, the Chairman of the Board [shall / shall not] have a casting vote.

2.2 Reserved Matters

Notwithstanding anything to the contrary contained herein, the Company shall not take, execute, or commit to any of the following actions without the prior affirmative written consent of Shareholders holding at least [Percentage, e.g., 75%] of the voting shares of the Company: (a) Alteration of the Memorandum or Articles of Association of the Company; (b) Any change in the authorized, issued, or paid-up share capital of the Company, including the issuance of new shares, convertible instruments, or options; (c) Merger, amalgamation, restructuring, winding-up, liquidation, or filing for insolvency of the Company; (d) Sale, lease, exchange, or disposition of all or substantially all of the assets or undertakings of the Company; (e) Incurring capital expenditure, borrowing, or assuming debt exceeding the aggregate sum of [PKR Amount] in any single financial year; (f) Declaration or distribution of any dividends inconsistent with the dividend policy approved by the Board.

2.3 Transfer of Shares and Restrictions

(a) Lock-in Period: No Shareholder shall sell, assign, pledge, mortgage, encumber, or otherwise transfer any Shares held by them for a period of [Number] years from the Effective Date (the "Lock-in Period"), except with the prior written consent of all other Shareholders. (b) Right of First Refusal (ROFR): (i) If any Shareholder (the "Transferor") receives a bona fide third-party offer to purchase all or any part of their Shares (the "Offered Shares"), the Transferor shall first offer the Offered Shares in writing (the "Transfer Notice") to the non-transferring Shareholders (the "Offerees"). (ii) The Offerees shall have a period of thirty (30) calendar days from receipt of the Transfer Notice to elect to purchase all, but not less than all, of the Offered Shares pro-rata to their existing shareholdings at the price and terms specified in the third-party offer. (iii) If the Offerees decline or fail to exercise the ROFR within the stipulated thirty (30) day period, the Transferor may, within sixty (60) calendar days thereafter, transfer the Offered Shares to the third party on terms no more favorable to the third party than those offered to the Offerees, subject to applicable regulatory approvals in Pakistan.

2.4 Representations and Warranties

Each Shareholder severally represents and warrants to the other Shareholders and the Company that: (a) Such Shareholder has the full legal capacity, power, and authority to execute, deliver, and perform this Agreement; (b) The execution and delivery of this Agreement and the fulfillment of its terms do not and will not violate any law, regulation, order, or contractual obligation applicable to such Shareholder; (c) The Shares held by such Shareholder are free and clear of all liens, charges, encumbrances, equities, or third-party claims of any kind whatsoever.

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SECTION 3: DEFAULT, TERMINATION, AND REMEDIES

3.1 Events of Default

A Shareholder shall be deemed to be in default under this Agreement upon the occurrence of any of the following events: (a) Failure to pay any capital call, debt, or financial obligation due to the Company within fifteen (15) Business Days of its due date; (b) Commission of a Material Breach of any provision of this Agreement or the Articles of Association; (c) The filing of a petition for bankruptcy, insolvency, winding-up, or appointment of a receiver against a Shareholder, or the passing of a resolution for the voluntary winding-up of a corporate Shareholder.

3.2 Notice and Cure Period

Upon the occurrence of an Event of Default, the non-defaulting Shareholder(s) or the Company shall serve a written default notice (the "Default Notice") upon the Defaulting Shareholder specifying the nature of the breach in reasonable detail. The Defaulting Shareholder shall have thirty (30) Business Days from the date of receipt of the Default Notice to cure the said breach to the reasonable satisfaction of the non-defaulting Parties (the "Cure Period").

3.3 Remedies for Uncured Default

If the Defaulting Shareholder fails to cure the Default within the thirty (30) Business Day Cure Period, the non-defaulting Shareholder(s) may, at their sole discretion, exercise any or all of the following legal remedies: (a) Compulsory Purchase: Require the Defaulting Shareholder to sell all of their Shares to the non-defaulting Shareholders at a price equal to seventy-five percent (75%) of the Fair Market Value or the nominal par value of the Shares, whichever is lower; (b) Suspension of Rights: Suspend the Defaulting Shareholder's right to vote at general meetings, receive dividends, or inspect the books and records of the Company for the duration of the default; (c) Injunctive Relief: Institute legal proceedings in a court of competent jurisdiction to seek specific performance, injunctive relief, or damages for breach of contract.

3.4 Termination

This Agreement shall terminate automatically upon the occurrence of any of the following events: (a) The written agreement of all Shareholders to terminate this Agreement; (b) The formal winding-up, liquidation, or dissolution of the Company pursuant to the Act; (c) The acquisition of one hundred percent (100%) of the issued and paid-up share capital of the Company by a single Shareholder or a single third-party acquirer.

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SECTION 4: BOILERPLATE LEGAL PROVISIONS

4.1 Severability

If any provision of this Agreement is held to be illegal, invalid, or unenforceable under the present or future laws of the Islamic Republic of Pakistan, such provision shall be fully severable. This Agreement shall be construed and enforced as if such illegal, invalid, or unenforceable provision had never comprised a part hereof, and the remaining provisions shall remain in full force and effect and shall not be affected by the illegal, invalid, or unenforceable provision.

4.2 Entire Agreement

This Agreement, together with the Schedules attached hereto and the Articles of Association of the Company, constitutes the entire understanding and agreement between the Parties with respect to the subject matter hereof and supersedes all prior oral or written negotiations, commitments, term sheets, or understandings between the Parties.

4.3 Force Majeure

No Party shall be liable or responsible to the other Parties, nor be deemed to have defaulted under this Agreement, for any failure or delay in fulfilling or performing any term of this Agreement when and to the extent such failure or delay is caused by or results from acts beyond the reasonable control of the affected Party, including acts of God, flood, fire, earthquake, explosion, war, terrorism, invasion, civil unrest, strikes, or nationwide systemic failure of public utilities or telecommunication networks in Pakistan ("Force Majeure"). The affected Party shall notify the other Parties in writing within seven (7) calendar days of the occurrence of a Force Majeure event.

4.4 Governing Law

This Agreement, and all claims or causes of action arising out of or relating to this Agreement, shall be governed by, construed, and enforced in accordance with the substantive laws of the Islamic Republic of Pakistan, without regard to its conflict of laws principles.

4.5 Dispute Resolution and Arbitration

(a) Any dispute, controversy, or claim arising out of, relating to, or in connection with this Agreement, including its formation, breach, termination, or validity, shall be amicably resolved through good-faith negotiations between the disputing Shareholders within thirty (30) calendar days of a written notice of dispute being served by one Party to the other. (b) If the dispute is not resolved amicably within the aforesaid thirty (30) day period, it shall be referred to and finally settled by arbitration in accordance with the Arbitration Act, 1940 (Act X of 1940). (c) The arbitral tribunal shall consist of three (3) arbitrators, with each disputing side appointing one (1) arbitrator, and the two (2) appointed arbitrators choosing the third presiding arbitrator. (d) The seat and venue of arbitration shall be [City, e.g., Lahore / Karachi / Islamabad], Pakistan, and the proceedings shall be conducted in the English language. (e) The award rendered by the arbitral tribunal shall be final, binding upon the Parties, and enforceable in any court of competent jurisdiction.

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SECTION 5: FORMAL EXECUTION BLOCK

IN WITNESS WHEREOF, the Parties hereto have caused this Shareholder Agreement Pakistan to be duly executed by their respective authorized representatives under seal as of the Effective Date first written above.

SIGNED, SEALED, AND DELIVERED
For and on behalf of [Company Name]

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Signature of Authorized Signatory
Name: [Director/CEO Name]
Title: [Managing Director / Chief Executive Officer]
CNIC No: [Director CNIC Number]
Date: [Date]

In the presence of Witnesses:

1. Signature: _________________________
   Name: [Witness 1 Name]
   CNIC No: [Witness 1 CNIC Number]

2. Signature: _________________________
   Name: [Witness 2 Name]
   CNIC No: [Witness 2 CNIC Number]

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SIGNED, SEALED, AND DELIVERED
By [Shareholder 1 Legal Name]

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Signature of Shareholder 1
CNIC No: [CNIC Number]
Date: [Date]

In the presence of Witnesses:

1. Signature: _________________________
   Name: [Witness 1 Name]
   CNIC No: [Witness 1 CNIC Number]

2. Signature: _________________________
   Name: [Witness 2 Name]
   CNIC No: [Witness 2 CNIC Number]

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SIGNED, SEALED, AND DELIVERED
By [Shareholder 2 Legal Name]

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Signature of Shareholder 2
CNIC No: [CNIC Number]
Date: [Date]

In the presence of Witnesses:

1. Signature: _________________________
   Name: [Witness 1 Name]
   CNIC No: [Witness 1 CNIC Number]

2. Signature: _________________________
   Name: [Witness 2 Name]
   CNIC No: [Witness 2 CNIC Number]

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SCHEDULE A: SHAREHOLDING STRUCTURE