Shareholders Agreement Template Zimbabwe

Shareholders Agreement Template Zimbabwe

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:

1. [Company Legal Name], a private company duly incorporated and validly existing under the laws of Zimbabwe, with its registered office situated at [Registered Office Address], Harare, Zimbabwe (hereinafter referred to as the "Company");
2. [Shareholder 1 Legal Name], of [Residential/Registered Address] (hereinafter referred to as "Shareholder 1"); and
3. [Shareholder 2 Legal Name], of [Residential/Registered Address] (hereinafter referred to as "Shareholder 2").

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

RECITALS

WHEREAS: A. The Company was duly incorporated under the Companies and Other Business Entities Act [Chapter 24:31] of Zimbabwe on [Date of Incorporation] with an authorized share capital of [Total Authorized Share Capital] divided into [Number of Shares] ordinary shares of [Par Value/Nominal Value] each. B. As of the Effective Date, the issued and paid-up share capital of the Company is held by the Shareholders in the proportions set forth in Schedule A attached hereto. C. The Shareholders desire to regulate their respective rights, obligations, and relationships inter se as shareholders of the Company, and to provide for the orderly management, governance, financing, and operation of the Company, as well as the transfer of shares, upon the terms and conditions hereinafter set forth.

NOW, THEREFORE, IT IS HEREBY AGREED by and between the Parties hereto, in consideration of the mutual covenants, premises, and undertakings contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, as follows:

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2. Operational Definitions

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

1. "Act" means the Companies and Other Business Entities Act [Chapter 24:31] of Zimbabwe, as amended, modified, or re-enacted from time to time, including any regulations promulgated thereunder.
2. "Affiliate" means, in relation to any corporate entity or individual, any other person or entity that, directly or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with such entity or individual.
3. "Board" or "Board of Directors" means the board of directors of the Company for the time being constituted in accordance with this Agreement and the Articles.
4. "Business Day" means any day other than a Saturday, Sunday, or public holiday recognized as such under the Public Holidays and Prohibition of Business Act [Chapter 10:21] of Zimbabwe.
5. "Articles" means the Articles of Incorporation and Memorandum of Incorporation of the Company, as amended from time to time.
6. "Control" means the power to direct or cause the direction of the management and policies of an entity, whether through the ownership of voting securities, by contract, or otherwise.
7. "Defaulting Shareholder" has the meaning ascribed to it in Clause 4.1.
8. "Encumbrance" means any mortgage, pledge, lien, charge, assignment, hypothecation, security interest, title retention, option, preemptive right, or any other encumbrance or security mechanism of any kind whatsoever.
9. "Fair Market Value" means the fair market value of the Shares as determined jointly in writing by the Shareholders, or, failing agreement within fourteen (14) Business Days, as determined by an independent firm of chartered accountants registered with the Institute of Chartered Accountants of Zimbabwe (ICAZ) appointed mutually by the Parties.
10. "Party" or "Parties" means the Company and the Shareholders individually or collectively, as the context requires.
11. "Pro Rata Share" means, in relation to any Shareholder, the proportion that the number of ordinary shares held by that Shareholder bears to the total issued ordinary share capital of the Company at the relevant time.
12. "Share" or "Shares" means an ordinary share of nominal value [Currency and Amount] in the capital of the Company, including any other shares resulting from any sub-division, consolidation, reclassification, or bonus issue thereof.
13. "Transfer" means any sale, assignment, pledge, encumbrance, gift, bequest, alienation, or other disposition of any Share or any legal or beneficial interest therein, whether voluntary or involuntary, by operation of law or otherwise.

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3. Substantive Terms & Obligations

3.1 Governance and Board Composition

1. The management and control of the business and affairs of the Company shall be vested in the Board.
2. The Board shall consist of up to [Number] directors. Shareholder 1 shall be entitled to appoint [Number] directors, and Shareholder 2 shall be entitled to appoint [Number] directors.
3. The quorum necessary for the transaction of business at any meeting of the Board shall be a majority of the directors, including at least one appointee of each Shareholder.
4. Decisions of the Board shall be adopted by a simple majority vote of directors present and voting, except for Reserved Matters specified in Schedule B, which shall require the prior unanimous written consent of all directors or all Shareholders.

3.2 Capital Contributions and Funding

1. The Shareholders shall contribute such initial equity capital as set out in Schedule A.
2. If the Company requires additional working capital or funding as determined by the Board, the Company shall first offer such capital-raising opportunity to each Shareholder on a Pro Rata Share basis.
3. No Shareholder is obligated to provide loan financing or guarantees to the Company unless mutually agreed in writing.

3.3 Restrictive Covenants and Duties

1. Each Shareholder covenants and undertakes that, for the duration of their shareholding in the Company and for a period of [Number] months following the date upon which they cease to be a Shareholder, they shall not directly or indirectly engage in, carry on, be employed by, or have any financial interest in any business enterprise in Zimbabwe that competes with the core business of the Company.
2. Each Shareholder warrants that they possess the legal capacity to enter into this Agreement and that the execution, delivery, and performance of this Agreement do not violate any existing laws of Zimbabwe or any binding contractual obligations.

3.4 Performance Metrics and Operational Standards

1. The Company shall operate in strict compliance with all applicable Zimbabwean regulatory frameworks, including tax laws enforced by the Zimbabwe Revenue Authority (ZRA), exchange control regulations administered by the Reserve Bank of Zimbabwe (RBZ), and labor standards governed by the Labour Act [Chapter 28:01].
2. The Board shall cause the Company to maintain accurate, comprehensive accounting records in accordance with International Financial Reporting Standards (IFRS) and to produce audited financial statements within ninety (90) days following the close of each financial year.

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4. Default, Termination, and Remedies

4.1 Events of Default

A Shareholder shall be deemed to be in material default under this Agreement (a "Defaulting Shareholder") upon the occurrence of any of the following events:

1. Breach of any material representation, warranty, or operative obligation contained in this Agreement which remains uncured following notice pursuant to Clause 4.2.
2. The passing of a resolution for the voluntary winding-up, liquidation, or judicial management of the Shareholder (other than for solvent internal restructuring).
3. The making of an application for an administration order, liquidation, or judicial management against the Shareholder under the Insolvency Act [Chapter 6:07] or the Act, or the appointment of a provisional liquidator or judicial manager.
4. Any attempt to Transfer Shares in violation of the restrictive provisions of this Agreement or the Articles.

4.2 Notice and Cure Period

If a default occurs, the non-defaulting Party or Parties shall give written notice of default to the Defaulting Shareholder detailing the nature of the breach. The Defaulting Shareholder shall have a period of thirty (30) Business Days from the date of receipt of such notice to remedy the breach (the "Cure Period").

4.3 Legal Recourse and Remedies Upon Default

If the Defaulting Shareholder fails to remedy the breach within the Cure Period:

1. The non-defaulting Shareholders shall have the option, exercisable by written notice within fifteen (15) Business Days after the expiry of the Cure Period, to purchase all (but not part) of the Shares held by the Defaulting Shareholder at a ninety percent (90%) discount to the Fair Market Value, or at par value, whichever is lower.
2. The non-defaulting Shareholders may institute legal proceedings in a court of competent jurisdiction to compel specific performance of the obligations herein or to recover damages for breach of contract.
3. The rights and remedies provided under this Agreement are cumulative and are not exclusive of any rights or remedies provided by the laws of Zimbabwe.

4.4 Termination

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

1. The formal winding-up, dissolution, or liquidation of the Company.
2. The acquisition of all issued Shares of the Company by a single Shareholder or a third-party purchaser.
3. Written agreement executed by all Shareholders.

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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 any court or tribunal of competent jurisdiction, such provision shall be severed to the extent of its invalidity or unenforceability, and the remaining provisions of this Agreement shall remain in full force and effect, provided that the foundational commercial intent of the Parties is not undermined.

5.2 Entire Agreement

This Agreement, including any Schedules annexed hereto, constitutes the entire agreement and understanding between the Parties relating to the subject matter hereof and supersedes all prior negotiations, draft agreements, understandings, or representations, whether oral or written.

5.3 Force Majeure

1. Neither Party shall be held liable for any failure or delay in fulfilling the terms of this Agreement if such failure arises from causes beyond its reasonable control, including acts of God, war, insurrection, civil unrest, epidemic, fire, flood, or binding statutory interventions by the Government of Zimbabwe (each, a "Force Majeure Event").
2. The Party affected by a Force Majeure Event shall promptly notify the other Parties in writing and shall use all commercially reasonable endeavors to mitigate the effects thereof. If a Force Majeure Event continues for a continuous period exceeding ninety (90) days, the Parties shall negotiate in good faith to restructure or terminate the operations affected.

5.4 Governing Law

This Agreement, and any non-contractual obligations arising out of or in connection with it, shall be governed by, construed, and enforced in accordance with the substantive laws of Zimbabwe, without giving effect to any choice of law principles.

5.5 Dispute Resolution

1. In the event of any dispute, controversy, or claim arising out of or relating to this Agreement, including its formation, breach, termination, or invalidity, the Parties shall first use their best endeavors to settle such dispute amicably through direct senior management negotiations within fourteen (14) Business Days of notice of the dispute.
2. Failing amicable settlement, the dispute shall be submitted to binding arbitration in Harare, Zimbabwe, administered by the Commercial Arbitration Centre in Harare in accordance with its current Commercial Arbitration Rules. The arbitral tribunal shall consist of a single arbitrator appointed jointly by the Parties, or failing agreement, by the Chairman of the Commercial Arbitration Centre. The language of the arbitration shall be English. The arbitral award shall be final and binding upon the Parties.

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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 signatories as of the Effective Date first written above.

FOR AND ON BEHALF OF THE COMPANY:

[Company Name]

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Signature:
Name: [Director/Authorized Signatory Name]
Title: [Director / Managing Director]
Date: [Date]

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SIGNED BY SHAREHOLDER 1:

[Shareholder 1 Legal Name]

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Signature:
Name: [Signatory Name]
Title: [Director / Authorized Signatory]
Date: [Date]

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SIGNED BY SHAREHOLDER 2:

[Shareholder 2 Legal Name]

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Signature:
Name: [Signatory Name]
Title: [Director / Authorized Signatory]
Date: [Date]

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SCHEDULE A: Shareholding Structure

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SCHEDULE B: Reserved Matters

(Matters requiring unanimous approval of the Board or Shareholders pursuant to Clause 3.1.4)

1. Any alteration to the Memorandum of Incorporation or Articles of the Company.
2. Any change to the authorized or issued share capital of the Company, including the creation, allotment, or issuance of any new shares, debentures, or options.
3. The declaration, payment, or recommendation of any dividend or distribution of capital reserves.
4. The approval of the annual business plan and operational budget of the Company.
5. The borrowing of money or incurring of indebtedness by the Company exceeding an aggregate principal amount of [Dollar Amount] outside the ordinary course of business.
6. The sale, lease, transfer, or disposal of the whole or a substantial part of the undertaking, property, or assets of the Company.
7. The appointment or removal of the Company's external auditors.
8. The initiation of any voluntary liquidation, business rescue proceedings, or judicial management of the Company.