Shareholders' Agreement: Board Observer Rights Clause

Summary

This template clause is for use in a shareholders' agreement between a corporation and its shareholders to create a board observer right. This template includes practical guidance and drafting notes. Shareholders' agreements are often used to place restrictions on the transfer of shares for various reasons. Shareholder's agreements can also be used to create other rights and restrictions amongst the parties to them. This template clause can be included in a shareholder's agreement between a corporation and its shareholders to create and reserve the right, in some or all shareholders who are party to the agreement, to place a board observer to monitor and observe board activity and actions taken. For additional information about shareholders' agreements, see Stockholders' Agreement Resource Kit.