Legal Importance & Sanctity of Executing a Shareholders Agreement (SHA):
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There is no valid provision as such that governs or sets down the rules for a shareholders agreement and there is no legal formality as well. However, certain aspects of the contract act help in forming the framework of this agreement. The clauses of the shareholders agreement are made in tandem with the Articles of association in order to avoid conflicts. However, the Articles of Association hold priority over the Shareholders Agreement and it should be ensured that the provisions existing in the shareholders agreement are made vis-à-vis the Articles of association. This is done so that the Articles of Association have the legal sanctity to help solve inter-se disputes.
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