Shareholder Agreement Template Kenya

SHAREHOLDER AGREEMENT

THIS SHAREHOLDER AGREEMENT (the "Agreement") is entered into this [Day] day of [Month], [Year] (the "Effective Date").

1. PREAMBLE & RECITALS

BETWEEN:

1. [Company Name], a private limited company incorporated under the laws of Kenya, having its registered office at [Address] (the "Company");
2. [Shareholder Name 1], of [Address] (the "Shareholder A"); and
3. [Shareholder Name 2], of [Address] (the "Shareholder B").

(Collectively referred to as the "Parties").

WHEREAS: A. The Company is a private company limited by shares engaged in the business of [Nature of Business]. B. The Shareholders are the legal and beneficial owners of the issued share capital of the Company as set out in Schedule A. C. The Parties wish to define their respective rights and obligations regarding the management, operation, and transfer of shares of the Company in accordance with the Companies Act (2015) of Kenya.

2. OPERATIONAL DEFINITIONS

1.1 "Act" means the Companies Act, 2015 (Laws of Kenya). 1.2 "Business Day" means a day (other than a Saturday, Sunday, or public holiday) on which commercial banks are open for business in Nairobi, Kenya. 1.3 "Board" means the Board of Directors of the Company. 1.4 "Encumbrance" means any mortgage, charge, pledge, lien, or security interest. 1.5 "Shares" means the ordinary shares of the Company, each with a nominal value of KES [Amount]. 1.6 "Transfer" includes any sale, assignment, gift, or disposal of shares.

3. SUBSTANTIVE TERMS & OBLIGATIONS

2.1 Management: The business and affairs of the Company shall be managed by the Board. Each Shareholder holding at least [Percentage]% of the issued shares shall be entitled to appoint one Director. 2.2 Dividend Policy: Subject to the Act and the Company’s Articles of Association, the Company shall distribute [Percentage]% of its annual net profits as dividends, unless the Board unanimously determines otherwise for reinvestment purposes. 2.3 Pre-emptive Rights: If the Company proposes to issue new shares, existing Shareholders shall have the right of first refusal to subscribe for such shares in proportion to their existing shareholdings. 2.4 Representations & Warranties: Each Party represents that they have the full legal capacity to enter into this Agreement and that such execution does not conflict with any prior existing contracts or court orders. 2.5 Performance Metrics: The Shareholders agree to attend all convened General Meetings and provide capital injections as may be required by a Special Resolution of the Company.

4. DEFAULT, TERMINATION, AND REMEDIES

3.1 Event of Default: A Party shall be in default if they commit a material breach of any term of this Agreement or become insolvent or subject to liquidation proceedings. 3.2 Cure Period: The non-defaulting party shall provide written notice of the breach. The defaulting party shall have thirty (30) business days from the receipt of such notice to remedy the breach. 3.3 Remedies: If the breach remains uncured, the non-defaulting party may: (a) Terminate this Agreement upon further notice; (b) Exercise a buy-out option of the defaulting party’s shares at Fair Market Value; or (c) Seek injunctive relief or specific performance in a court of competent jurisdiction.

5. BOILERPLATE LEGAL PROVISIONS

4.1 Governing Law: This Agreement shall be governed by and construed in accordance with the laws of the Republic of Kenya. 4.2 Dispute Resolution: Any dispute arising out of this Agreement shall be referred to arbitration in Nairobi, Kenya, in accordance with the Arbitration Act, 1995. The seat of arbitration shall be Nairobi and the language shall be English. 4.3 Force Majeure: No party shall be liable for failure to perform duties due to acts of God, war, or government restriction, provided notice is served within five (5) business days of the event. 4.4 Entire Agreement: This document constitutes the entire agreement between the Parties and supersedes all prior understandings. 4.5 Severability: If any provision of this Agreement is held to be invalid, the remaining provisions shall continue to be valid and enforceable to the fullest extent permitted by law.

6. FORMAL EXECUTION BLOCK

IN WITNESS WHEREOF, the Parties have executed this Agreement as of the Effective Date.

For and on behalf of [Company Name]: Name: __________________________ Title: Director Date: ___________________________

Signed by [Shareholder Name 1]: Signature: ______________________ Date: ___________________________

Signed by [Shareholder Name 2]: Signature: ______________________ Date: ___________________________

In the presence of (Witness): Name: __________________________ ID Number: _____________________ Signature: ______________________