Shareholders Agreement Sample Nigeria Pdf

SHAREHOLDERS AGREEMENT SAMPLE NIGERIA PDF

1. DOCUMENT PREAMBLE & RECITALS

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

PARTIES:

1. [Company Name], a private company limited by shares, incorporated under the laws of the Federal Republic of Nigeria, with its registered office situated at [Company Registered Address] (hereinafter referred to as the "Company", which expression shall where the context so admits include its successors-in-title and permitted assigns); of the first part;

2. [Shareholder 1 Name] (RC / Passport No. [Identifier]), of [Shareholder 1 Address] (hereinafter referred to as "Shareholder A", which expression shall where the context so admits include its successors-in-title and permitted assigns); of the second part; and

3. [Shareholder 2 Name] (RC / Passport No. [Identifier]), of [Shareholder 2 Address] (hereinafter referred to as "Shareholder B", which expression shall where the context so admits include its successors-in-title and permitted assigns); of the third part.

(Shareholder A and Shareholder B are hereinafter collectively referred to as the "Shareholders" and individually as a "Shareholder").

RECITALS:

WHEREAS: A. The Company was incorporated in Nigeria on [Incorporation Date] under the Companies and Allied Matters Act (CAMA) as a private company limited by shares, with an initial authorized share capital of [Authorized Share Capital Amount] divided into [Number of Shares] ordinary shares of [Nominal Value per Share] each. B. As of the Effective Date, the issued and paid-up share capital of the Company is [Paid-up Capital Amount], held by the Shareholders in the proportions set out in Schedule A of this Agreement. C. The Parties wish to define their respective rights, obligations, and relationship inter se, as well as the governance, management, and operation of the Company, and to make provisions for the transfer of shares and other matters incidental thereto.

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

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2. OPERATIONAL DEFINITIONS

For the purposes of this Agreement, except where the context otherwise requires, the following terms shall have the meanings ascribed to them below:

1. "Act" or "CAMA" means the Companies and Allied Matters Act, Cap C20, Laws of the Federation of Nigeria 2020 (as amended or re-enacted from time to time).
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.
3. "Board" or "Board of Directors" means the board of directors of the Company as constituted from time to time in accordance with this Agreement and the Articles.
4. "Business Day" means a day (other than a Saturday, Sunday, or official public holiday recognized by the Federal Government of Nigeria) on which commercial banks are open for general business in Lagos, Nigeria.
5. "Confidential Information" means all information of a confidential, proprietary, or commercial nature relating to the business, assets, finances, technology, trade secrets, customers, or suppliers of the Company, whether disclosed orally, in writing, or in electronic format.
6. "Control" means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract, or otherwise.
7. "Defaulting Shareholder" means a Shareholder who has committed a Material Breach of this Agreement or has suffered an Insolvency Event.
8. "Encumbrance" means any mortgage, charge (fixed or floating), pledge, lien, hypothecation, encumbrance, security interest, option, right of first refusal, preemptive right, third-party right or interest, or restriction of any kind.
9. "Fair Value" means the fair market value of the Shares determined jointly by the Shareholders or, failing agreement within fourteen (14) Business Days, by an independent firm of Chartered Accountants appointed by the President of the Institute of Chartered Accountants of Nigeria (ICAN).
10. "Insolvency Event" means, in relation to any Party, the passing of a resolution for its winding-up, the appointment of a receiver, liquidator, administrator, or provisional liquidator over all or substantially all of its assets, or its inability to pay its debts within the meaning of CAMA.
11. "Material Breach" means a failure by a Party to perform, observe, or comply with any material provision, obligation, or undertaking under this Agreement, which causes substantial harm or goes to the root of this Agreement.
12. "Person" means any individual, corporation, partnership, limited liability company, joint venture, trust, unincorporated organization, government, or any agency or political subdivision thereof.
13. "Shares" means the ordinary shares in the capital of the Company from time to time, and any securities convertible into or exchangeable for ordinary shares.
14. "Transfer" means any sale, assignment, pledge, hypothecation, gift, creation of a trust over, declaration of trust regarding, or any other disposition or alienation of any Shares, whether voluntary or involuntary, by operation of law or otherwise.

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3. SUBSTANTIVE TERMS & OBLIGATIONS

3.1 Corporate Governance and Board Composition

1. The management and control of the business and affairs of the Company shall be vested in the Board, which shall consist of not more than [Number] directors.
2. Shareholder A shall be entitled to nominate and appoint [Number] directors to the Board, and Shareholder B shall be entitled to nominate and appoint [Number] directors to the Board.
3. The quorum necessary for the transaction of business at any meeting of the Board shall be [Number] directors, which must include at least one (1) nominee director of each Shareholder.
4. The Chairman of the Board shall be appointed by [Shareholder Name/Designation] and shall not have a casting vote in the event of a tie.

3.2 Reserved Matters

1. Notwithstanding anything to the contrary in this Agreement, the Company shall not take, and the Board shall not authorize or implement, any of the actions specified in Schedule B (Reserved Matters) without the prior affirmative written consent or vote of all Shareholders.

3.3 Capital Contributions and Funding

1. The Shareholders shall contribute to the working capital of the Company in proportion to their respective shareholdings as set out in Schedule A, or as may be mutually agreed in writing by the Board from time to time.
2. If the Company requires additional funding and the Board resolves to make a call for capital, each Shareholder shall have a preemptive right to subscribe for its pro-rata share of the new issue of Shares.

3.4 Representations and Warranties

Each Shareholder represents and warrants to and for the benefit of the other Shareholders and the Company that:

1. It has the full legal capacity, power, and authority to enter into, execute, and deliver this Agreement and to perform its obligations hereunder.
2. The execution and delivery of this Agreement and the fulfillment of its terms will not violate any law, regulation, court order, or contract to which it is a party or by which it is bound.
3. The Shares held by it as of the Effective Date are free and clear of any Encumbrances.

3.5 Restrictions on Transfer of Shares

1. Except as expressly permitted under this Agreement, no Shareholder shall Transfer any Shares without the prior written consent of the other Shareholders.
2. Right of First Refusal: If any Shareholder wishes to Transfer all or any part of its Shares (the "Transferor"), it shall first offer such Shares to the non-transferring Shareholders pro-rata to their existing shareholdings, on terms no less favorable than those offered by a bona fide third-party purchaser.

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4. DEFAULT, TERMINATION, AND REMEDIES

4.1 Events of Default

A Shareholder shall be deemed to be in default under this Agreement upon the occurrence of any of the following events:

1. Failure to pay any capital call, debt, or financial contribution due to the Company within fourteen (14) Business Days of receiving written notice of such due obligation.
2. Commission of a Material Breach of any provision of this Agreement, which breach is not remedied in accordance with Clause 4.2.
3. The occurrence of an Insolvency Event affecting such Shareholder.
4. Fraud, willful misconduct, or gross negligence committed by a Shareholder in connection with the operations or business of the Company.

4.2 Notice and Cure Period

1. In the event of an alleged Default, the non-defaulting Shareholder(s) shall issue a detailed written notice of default to the Defaulting Shareholder.
2. The Defaulting Shareholder shall have a period of thirty (30) Business Days from the date of receipt of the notice of default to cure such default (the "Cure Period"), where the default is capable of remedy.

4.3 Remedies Upon Default

If a Defaulting Shareholder fails to cure the default within the Cure Period, the non-defaulting Shareholder(s) may, at their sole discretion, exercise any or all of the following legal remedies:

1. Require the Defaulting Shareholder to sell all of its Shares to the non-defaulting Shareholders at a purchase price equal to seventy-five percent (75%) of the Fair Value of such Shares.
2. Suspend the voting rights and dividend entitlements of the Defaulting Shareholder until the breach or default is fully remedied.
3. Institute legal proceedings in a court of competent jurisdiction for specific performance, injunctive relief, and/or damages for breach of contract.

4.4 Termination of Agreement

This Agreement shall terminate automatically upon the occurrence of any of the following events:

1. The winding up, liquidation, or dissolution of the Company by formal resolution or court order.
2. The acquisition of all issued and outstanding Shares of the Company by a single Person.
3. Written agreement executed by all Shareholders to terminate this Agreement.

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5. BOILERPLATE LEGAL PROVISIONS

5.1 Severability

If any provision of this Agreement is held to be invalid, illegal, or unenforceable by a court or arbitral tribunal of competent jurisdiction, such provision shall be deemed modified to the minimum extent necessary to make it valid, legal, and enforceable. If such modification is not possible, the relevant provision shall be deemed deleted, and the remaining provisions shall continue in full force and effect.

5.2 Entire Agreement

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

5.3 Force Majeure

1. No Party shall be liable for any failure or delay in performing its obligations under this Agreement if such failure or delay arises from an event beyond the reasonable control of that Party, including acts of God, flood, fire, earthquake, explosion, war, terrorism, civil commotion, strikes, epidemics, or governmental restrictions (each a "Force Majeure Event").
2. The Party affected by a Force Majeure Event shall promptly notify the other Parties in writing, specifying the nature and expected duration of the event, and shall use all reasonable efforts to mitigate the effects.

5.4 Governing Law

This Agreement, and any non-contractual obligations arising out of or in connection with it, shall be governed by, and construed in accordance with, the laws of the Federal Republic of Nigeria.

5.5 Dispute Resolution

1. Any dispute, controversy, or claim arising out of or relating to this Agreement, including its formation, breach, termination, or validity, shall first be settled amicably through good-faith negotiations between the authorized representatives of the disputing Shareholders within twenty-one (21) Business Days.
2. If the dispute cannot be resolved amicably within the aforesaid period, it shall be referred to and finally resolved by arbitration in Lagos, Nigeria, conducted in English by a single arbitrator appointed jointly by the disputing parties, or in default of agreement, by the Chairman of the Chartered Institute of Arbitrators (UK) Nigeria Branch. The arbitration shall be conducted in accordance with the Arbitration and Mediation Act 2023.

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6. FORMAL EXECUTION BLOCK

IN WITNESS WHEREOF, the Parties hereto have caused this Shareholders Agreement to be duly executed by their respective authorized officers, representatives, or individual hands as of the Effective Date first above written.

SIGNED, SEALED, AND DELIVERED

By [Company Name] (RC No. [Registration Number]):

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Name: [Director Name]
Title: Managing Director / Director
Date: [DD/MM/YYYY]

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Name: [Secretary Name]
Title: Company Secretary
Date: [DD/MM/YYYY]

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SIGNED, SEALED, AND DELIVERED

By Shareholder A ([Shareholder 1 Name])}:

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Signature: [Signature]
Name: [Signatory Name]
Title: [Title / Capacity]
Date: [DD/MM/YYYY]

In the presence of:
Witness Name: [Witness Name]
Address: [Witness Address]
Occupation: [Witness Occupation]
Signature: [Witness Signature]

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SIGNED, SEALED, AND DELIVERED

By Shareholder B ([Shareholder 2 Name])}:

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Signature: [Signature]
Name: [Signatory Name]
Title: [Title / Capacity]
Date: [DD/MM/YYYY]

In the presence of:
Witness Name: [Witness Name]
Address: [Witness Address]
Occupation: [Witness Occupation]
Signature: [Witness Signature]

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SCHEDULE A: SHAREHOLDING STRUCTURE

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SCHEDULE B: RESERVED MATTERS

The following matters require the unanimous prior written consent of all Shareholders:

1. Alteration of the Memorandum or Articles of Association of the Company.
2. Any change in the authorized, issued, or paid-up share capital of the Company, including the creation, allotment, or issuance of any new shares or convertible securities.
3. The winding up, liquidation, restructuring, amalgamation, merger, or reorganization of the Company.
4. The sale, lease, transfer, or disposal of all or a substantial part of the undertaking, property, or assets of the Company.
5. The entry into any joint venture, partnership, or profit-sharing arrangement with any third party.
6. The borrowing of money or creation of any Encumbrance over the Company's assets exceeding the sum of [Currency & Amount].
7. The approval of the annual business plan and operational budget of the Company.