The Importance of Having a Reserve List in Your Shareholders Agreement

A reserved matters list is a document that outlines the decisions that must be made by all shareholders in a company, rather than by the directors alone. This especially can help to protect the interests of minority shareholders, and ensure that all major decisions are made with the input of everyone involved.

 

There are a number of key reasons why you might need a reserved matters list in your shareholders agreement. These include:

 

• To protect the interests of minority shareholders. In a company with a small number of shareholders, it can be easy for the majority shareholders to make decisions that benefit themselves at the expense of the minority. A reserved matters list can help to ensure that all shareholders have a say in major decisions, and that no one shareholder can unilaterally take actions that could harm the company.

 

• To provide clarity and certainty. A reserved matters list can help to clarify who has the authority to make decisions within the company. This can help to avoid confusion and conflict, and can make it easier for the company to operate smoothly.

 

• To reduce the risk of disputes. When there is no clear process for making decisions, it can be more likely that disputes will arise between shareholders. A reserved matters list can help to reduce the risk of disputes by providing a clear framework for decision-making.

 

• To promote transparency and accountability. A reserved matters list can help to promote transparency and accountability within the company. By making it clear who has the authority to make decisions, and how those decisions will be made, a reserved matters list can help to ensure that the company is run in a fair and open way.

 

The specific matters that should be included on a reserved matters list will vary from company to company. However, some common examples include:

 

• Amending the company’s constitution.

 

• Issuing new shares.

 

• Acquiring or disposing of assets.

 

• Borrowing money over a certain amount.

 

• Declaring dividends.

 

• Entering into major contracts over a certain amount.

 

• Making major changes to the company’s business operations.

 

If you are considering forming a company, or if you are already a shareholder in a company, it is important to discuss the need for a reserved matters list with your lawyer. A reserved matters list can be an important tool for protecting the interests of all shareholders, and for ensuring that the company is run in a fair and open way.

 

Here are some additional examples of matters that may be included on a reserved matters list:

 

• Settling disputes.

 

• Making gifts or charitable donations.

 

• Changing the company’s name or registered office.

 

• Winding up the company.

 

The specific matters that are included on a reserved matters list will depend on the specific circumstances of each company. However, by including a reserved matters list in your shareholders agreement, you can help to ensure that all major decisions are made with the input of all shareholders, and that the company is run in a fair and transparent way.