Stockholders Agreement Commentary

by Practical Law Corporate & Securities

A Practice Note discussing stockholders agreements, also known as shareholders agreements, and their principal provisions. This Practice Note explores how these private agreements supplement state corporate law and a company's organizational documents, providing high-level guidance on drafting critical governance terms like board designation and observer rights, voting agreements, and supermajority approval requirements. It also examines the negotiation and structure of stock transfer provisions, including rights of first refusal (ROFR), tag-along rights, drag-along rights, and buy-sell provisions. Further analysis covers other essential topics such as preemptive rights to prevent dilution and registration rights for liquidity.