Shareholder agreement between partners – the basis for a long-term successful business

When establishing a company with another partner, one of the most important goals is to reach a balanced agreement for the company (foundation agreement) that will jointly express the long-term goals of the company.

This is especially so if the investment and the shares are equal, because it is very easy for the company’s operation to get stuck, if the basic issues are not properly regulated by such an agreement.

The law on commercial companies largely leaves freedom for negotiation, only providing a legal solution if the partners have not agreed on a certain aspect.

 Distribution of profit

Every company is founded with one goal, to make a profit for its partners. However, after the company has been operating for some time and has already started to accumulate profits, very often differences can arise between the partners about the idea of ​​distributing such profits. Therefore, the Law gives the possibility for the contract to determine how the profit will be distributed and this is one of the key possibilities that should be regulated during the establishment of the company together with other partners.

That is, the law states that: Partners have the right to an appropriate share of the profit, unless the right to participate in the profit is limited or excluded by the company agreement. The company agreement determines the way of deciding on the distribution, the time when it is carried out, the possibility for the manager to decide on the distribution according to the criteria and guidelines determined by the meeting of the partners, the way in which the records of the distribution are kept and the amount to which each individual partner is entitled is determined, the limitations during the distribution and other issues, except those for which in accordance with this law and the contract for the company, it is determined that decisions are made at a meeting of partners.

The mentioned provisions provide an opportunity for the partners to insert the long-term goals in the agreement expressed through the method of profit distribution. The contract can have all kinds of creative provisions in this regard, which of course express the intention of the partners during the establishment of the company, that is, the signing of the contract of establishment.

Determination of the size of the share

In most cases in established trading companies, the amount of the share is percentage equal to the amount of the contribution of the partner. This results from the general rule of the law according to which the share of a partner in the company is determined according to the size of the contribution taken by the partner.

However, for various reasons and motives, the share may not be determined according to the size of the share taken by the partner.

Namely, the law allows a certain partner to have a different share in relation to his contribution.

The reasons for this may be different, but it is necessary to know that the law allows such an opportunity for the partners and it may be the reason for the better functioning of the company in the long term.

 Determination of ways to transfer the shares

The law gives the possibility to the agreement to be creative in relation to the method of disposal of the shares by the partners.

The only rule that must be followed is the obligation to offer the share primarily to the other partners.

However, the provisions for the disposal of the share provide the opportunity for the partners to agree on various modern corporate provisions regarding the disposal of the share, such as “Tag Along”, “Drag Along” and the like.

Deadlock prevention mechanism

Very often, especially in more complex partner relations, there are situations when the gathering of partners can be put in a role to block the operation of the company, and thus its existence.

For this reason, in relation to various issues, it is advisable to regulate the method of voting and decision-making of the partners with the agreement, especially in order to prevent impossibility of making a decision (e.g. two partners with equal shares could not appoint new manager if they do not agree).

Therefore, in accordance with the law, it is determined that: The issues that partners decide on at a meeting of partners or through correspondence, the manner, conditions and procedure of decision-making are determined by the company agreement.

Also, the general rule is that. Each amount of the stake that corresponds to the value of 100 EUR gives one vote, while the parts under 100 EUR expressed in denars are not taken into account when determining the right to vote. However, with the same provision it is determined that in the contract for the company it can be determined that the partners have a different right to vote, but each partner must have the right to at least one vote.

Attorney Martin Boskoski
Lalicic and Boskoski from Skopje
Law Office

The above does not constitute legal advice. For legal advice, please contact a professional – a lawyer