Joinder to Shareholders' Agreement

Summary

This joinder to shareholders' agreement template is a joinder agreement for use by a new shareholder to become a full party to the shareholders' agreement of a corporation. This template includes practical guidance and drafting notes. Most shareholders' agreements state that any new shareholders of the company (whether by purchase from an existing shareholder or via any other route) are required to agree to the terms of the existing shareholders' agreement. The goal is to maintain the same terms and intentions between the company's existing and new shareholders (including the elaborate transfer restrictions and other shareholder rights therein). A re-execution of the existing shareholders' agreement or the filing of an amendment is a cumbersome way to add a party to the agreement whenever a third party obtains shares in the company. The most convenient solution involves a pre-negotiated joinder agreement. In the shareholders' agreement, the parties (1) agree on the form of the joinder agreement and attach it as one of the exhibits, and (2) provide that any holder of shares needs to simply execute the joinder agreement to become a full party to the existing shareholders' agreement, with all the rights and obligations arising therefrom. For a full listing of related private equity and ancillary agreements in M&A transactions content, see Private Equity Transactions Resource Kit and Ancillary Agreements in M&A Transactions Resource Kit. For more information, see Corporations.