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  1. Newbie
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    shareholders' agreement

    Hello there,
    Could you please explain this in simple terms?

    If the aggregate of the Vendor's Shares in the Acceptance Notices received from a Shareholder or Shareholder's exceeds the number of the Vendor's Shares that are for sale, the Shareholders' providing such Acceptance Notices shall be entitled to acquire the Vendor's Shares that are for sale in the same proportions as their then prevailing shareholding.

  2. MikeNewYork's Avatar
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    First, the apostrophes in both appearances of "shareholder" are incorrect.

  3. probus's Avatar
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    Your quotation is part of a "shotgun provision" in a corporate shareholders' agreement that has more than two shareholders.

    In a two person partnership, the shotgun is simple. The partner who wishes to get rid of the other simply makes an offer to buy his or her partner's share at a certain cash price. Pursuant to the shotgun agreement, the offeree then has only two choices. He or she can accept the offer and sell, or instead buy out the offering partner at the same cash price.

    Your text generalizes the case to a situation where there are more than two shareholders. So if one of the multiple shareholders wishes to be rid of one or more partners, he or she makes an offer to purchase to the others. The recipients of that offer then have the same choice: sell at that price, or buy out the offeror at that price. But their ability to do either is proportional to their share of the remaining ownership. So, for example, suppose there are four of us and we each own 25%. You offer to buy the rest of us out at $x per share. I can accept your offer and sell, or I can choose to buy you out instead, but only to the extent of one third of your shares.
    Last edited by probus; 14-Mar-2014 at 19:33.

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