What is an ownership agreement?

A shareholders’ agreement is an agreement between the owners of a private limited company or a public limited company regarding how the company should be managed. When two or more parties enter into ownership together, they are often on good terms. Although the foundation of the relationship may be a strong partnership between the company’s owners, it is a good idea to have a shareholders’ agreement in place. This agreement sets the framework for collaboration, reduces potential future conflicts, and establishes processes for resolving disputes.

Why should you create a shareholders’ agreement?

The purpose of a shareholders’ agreement is to regulate the mutual rights and obligations of the shareholders in the company. It is therefore advisable to draft the agreement at the time of establishing the private or public limited company, ensuring that all parties agree on the terms and procedures for resolving potential disagreements. A shareholders’ agreement is particularly important in cases where, for example, an owner wishes to sell their shares or if the company is to be sold at some point. These scenarios are pre-regulated in the agreement, helping to avoid unnecessary and larger conflicts.

What should a shareholders’ agreement include?

Under Danish law, there is no formal requirement for a company to have a shareholders’ agreement. It is a private legal agreement and is technically independent of the Danish Companies Act. Therefore, the shareholders’ agreement should be tailored to the specific needs of the shareholders while also considering the practical operation of the company.

Fundamentally, the agreement should address three main areas often referred to as money, power, and exit. Below is a list of issues that can be included in the agreement. While the list is not exhaustive, these are some key aspects to consider:

• Who will form the company’s management and handle day-to-day operations?
• Are shareholders allowed to invest in, participate in, or collaborate with competing companies?
• Should the other shareholders have a right of first refusal if shares are to be transferred?
• Should the other shareholders have a purchase right?
• How should shares be transferred if a shareholder becomes unable to fulfil their role in the company (e.g., due to illness or resignation)?
• What should the consequences be if a shareholder materially breaches the shareholders’ agreement?
• When and to what extent should dividends be paid to the shareholders?
• Should shareholders’ ownership stakes be classified as separate property (not part of marital assets)?
• Are there any special requirements for accounting and auditing?
• Are shareholders allowed to pledge their shares as collateral?
• Should there be special rules for certain decisions (and if so, which?) when making significant decisions about the company?

As mentioned, the above are just some of the considerations to keep in mind. In practice, the list is often much longer and more detailed, depending on the preferences and wishes of the shareholders and the type of business they operate.