г. Минск, ул. Карла Либкнехта, 66
офис 210

Joint stock agreements

The institute of shareholder agreements was formed and developed in English law. The concept itself also comes from there. The first transactions between the owners of the company’s securities were concluded in England. In such a document, the principles of enterprise management are fixed, which satisfy all participants of the joint-stock company. In the world, for decades of concluding shareholder agreements, a clear practice of conducting such cases has been formed. The existence of such agreements allows you to minimize losses and other threats, as well as resolve conflict issues. This is a convenient tool for doing business in organizations where there are shareholders who own the main block of shares (majority) and shareholders who cannot directly participate in the management of the company due to owning a small number of its shares (minority). All such agreements can be divided into two parts. The first stipulates the possibility of minority shareholders to influence the company’s affairs. The second type of agreement is concluded between large shareholders who, along with investors, can regulate its activities and direct the vector of corporate policy. The execution of such documents not only contributes to a more transparent conduct of business within the company, but also helps to attract financing from abroad. If a company has a shareholder agreement, then it can count on receiving funds from large financial institutions. At the end of January 2016, innovations appeared in the legislation of our country. The regulatory legal act «On Amendments and Additions to Some Laws of the Republic of Belarus on Business Entities» has entered into force. It was developed a year ago to regulate some nuances, rules and activities of joint-stock communities. One of the innovations is the possibility of concluding shareholder agreements (AC). This is a new term for the law of our country. Let’s figure out what it means.

What is an agreement between shareholders?

Experts associate the emergence of this concept with English law. The fact is that the co-owners of organizations, in respect of which this type of legislation was applied when solving current problems and issues, used this term for the first time. In English, it sounds like «shareholders’ agreements». And denotes agreements in which the positions of shareholders were described and deciphered, as well as decisions taken by them on the management of a legal entity. In world practice, such agreements between the participants of joint-stock companies have been used for several decades. This is a very convenient tool that has proven its effectiveness over the years. In particular, it is used by:
  • to reduce the risk of occurrence and elimination of corporate disputes within the company;
  • to control the relations between minority and majority shareholders.
Joint-stock agreements differ from each other depending on the goals. The first type of agreements is concluded between minority shareholders in order to get a chance to influence the company’s activities. The second one unites larger co-owners for mutual control and achievement of the set goals. Sometimes a shareholder document is necessary for the further development of the company. In accordance with the agreement, important changes are made to the constituent documentation, which are a prerequisite for obtaining financial support from outside or for attracting a new business partner.

Shareholders’ rights

This type of interaction gives co-owners more freedom to work with employees and society. In addition, having formalized an agreement, you can exercise your rights and fulfill your duties more flexibly. This is especially interesting for minority participants. It is necessary to resort to this measure if it is necessary to make adjustments to the powers of the participants of the joint-stock company. In practice, such an agreement is concluded between several shareholders who have a small number of shares in their hands. If they combine their resources within the framework of the agreement, they will get much more opportunities in the management of the company.

What can the agreement contain?

The shareholders’ agreement may provide for various changes that will come into force after signing. For example:
  • adjustment of the voting method;
  • changing the composition of participants who are involved in solving important issues;
  • setting a certain price for shares;
  • determining the conditions that are mandatory for the sale of a share in the business.
In addition, the document may provide for other actions related to the management of the enterprise, the activities of the company’s employees, the reorganization of the joint-stock company and its complete liquidation. When drawing up an agreement, it is important to determine its subject. The fact is that the obligations of the party to participate in voting in accordance with the requirements of the management bodies of the enterprise cannot act in its role. In other words, the shareholder document cannot provide that the management apparatus has the right to influence the shareholder’s decision during the voting itself.

Requirements for the form of the document

The agreement is considered valid if it is drawn up in writing, and also has the signatures of the parties involved in the discussion. The shareholders’ agreement is binding only on those persons who have signed it. If disputes arise under the document, they are resolved in court.


In accordance with the legislation, all parties to the agreement must be notified of the upcoming procedure no later than three days before the shareholders’ meeting. This mission falls on the shoulders of the legislator. If a joint-stock agreement is concluded less than 3 days before the meeting of shareholders, the joint-stock company must be notified of this on the day of signing the document, but before the meeting begins. Those shareholders who are not related to the essence of the document should also be aware of what procedure is ahead. Moreover, it should be complete information:
  • purpose of the agreement;
  • which parties will sign and how many shares they have.
The form of information is determined by the regulations or the articles of association of the company. The information must also be received by the recipients three days before the meeting. It is possible to inform the agenda of the joint-stock agreement with the help of mass media or by posting an article on Internet resources. If the procedure is planned to be carried out less than 3 days before the meeting, then information about the upcoming event should be disclosed before the meeting of the owners of the company’s shares.

Disadvantages of this type of agreement

This type of relationship between the company’s shareholders is only gaining popularity. Many companies have already appreciated the advantages of such documents. And this is a big step in the development of corporate law in Belarus. However, despite all the advantages, the shareholder agreement also has disadvantages:
  • the inability to create a document that will prohibit the creation of enterprises of a similar orientation;
  • the priority of the papers has not been determined, that is, which agreement will have an advantage if there are contradictions in the documentation;
  • lack of judicial practice and detailed interpretations;
  • refers to discretionary rules to the Charter company that can create a number of issues on the implementation of the AU;
  • does not address the question about foreign participants (whether in this case, based on the laws and regulations of another country);
  • reduced the transparency of the functioning of the enterprise for external investment partners, which often leads to problems in identifying control mechanisms of such company;
  • a confidential agreement may infringe on shareholders not participating in the procedure.

Experience of the Russian Federation

If in Belarus such a type of legal relationship is just emerging, then in Russia the AU institute received support more than 10 years ago. At that time, several laws were issued that strictly regulated this issue. Before the adoption of these amendments, Russian businessmen also had certain difficulties when they signed a joint-stock agreement. For example, earlier the document was drawn up on the basis of the general principle of freedom, which periodically called into question the legitimacy of such documents. The procedure could be attended by: shareholders, participants in respect of shares and participation interests of Russian business entities. At this stage, the laws of the Russian Federation continue to adapt to changing conditions. Russia and Belarus have a number of differences in legal regulation, including AS. However, legal experts strongly recommend paying attention to the experience of our eastern neighbors. The established practice of the Russian Federation of applying the provisions of the legislation on the AU will have a positive impact on the development of our system.

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г. Минск
ул. Карла Либкнехта, 66А
офис 210