Shareholders' Agreement Clauses Related to the Operation of the Company

Introduction

The shareholders' agreement (pacte d'associes) is one of the most structuring documents in the life of a company. Confidential by nature and complementary to the bylaws (statuts), it organizes relations between shareholders, frames decision-making and anticipates deadlock situations before they degenerate into litigation.

Four broad families of clauses are traditionally distinguished: those related to voting rights, those concerning transfers of securities, those of a financial nature, and finally the clauses deemed essential to the operation of the company. It is this last category that we detail here: the clauses that bring the company to life day to day.

At Equisafe, we support issuers in structuring their capital and tokenizing their financial securities on EVM (Ethereum Virtual Machine) blockchains. A well-drafted agreement, coupled with a cap table maintained in a reliable and compliant manner, forms the foundation of sound and auditable governance.

The Definitions Clause

Definitions clauses eliminate any ambiguity over the terminology used throughout the agreement. Each key term (shareholder, security, control, third party, affiliate, liquidity event) must be defined precisely to avoid divergent interpretations.

The choice of vocabulary is strategic: adopting a broad notion such as security (the full range of transferable securities) rather than a specific designation provides valuable flexibility should the company's legal structure evolve. This approach is all the more relevant in a tokenization context: when securities are represented in digital form on a blockchain, a flexible definition naturally encompasses tokenized securities without the need to renegotiate the agreement.

The Term Clause

The agreement may be concluded for a fixed or indefinite term.

• Fixed term: this provides security by preventing any unilateral termination during the set period. It is often aligned with an investment horizon or an exit event.
• Indefinite term: this allows each party to terminate the agreement subject to reasonable notice.

Under French law, perpetual commitments are prohibited: an agreement therefore cannot bind shareholders indefinitely with no possibility of exit. The choice of term must be consistent with the financing strategy and any upcoming fundraising operations.

The Accession Clause

This provision ensures that any new shareholder must accede to the existing agreement at the time they acquire securities. It ensures the consistency and enforceability of commitments across the entire shareholder base.

In a tokenized environment, this clause takes on a new operational dimension: as the circulation of securities can be more fluid, it is essential that accession to the agreement be verified before any transfer. The compliance mechanisms built into Equisafe's blockchain registers make it possible precisely to make a transfer of securities conditional on compliance with the established rules, preventing a holder from escaping the obligations of the agreement.

The Confidentiality Clause

The confidentiality clause confers a confidential character on the entire agreement. Shareholders agree to refrain from any disclosure to third parties, except where required by law or regulation.

This confidentiality is all the more important given that the agreement contains sensitive information on governance, valuation and the balance of power between shareholders. The clause generally specifies the duration of the obligation, its scope and the permitted exceptions (regulatory authorities, advisors, due diligence governed by a confidentiality undertaking).

The Role Clause

This clause specifies the operational roles within the company, in addition to employment contracts. It details:

• the procedures for the appointment and removal of executives;
• the obligations of shareholders regarding decision-making;
• the reporting and transparency requirements vis-a-vis the other shareholders.

When properly calibrated, it clarifies who does what and considerably reduces the risk of conflict over the scope of each party's responsibilities.

The Supervisory Body Clause

A supervisory committee oversees management functions. It receives periodic reports on legal, financial and accounting matters in order to assess strategic decisions and verify the proper execution of the executives' mandate.

This body plays an essential checks-and-balances role, particularly in companies that have opened their capital to external investors. The quality and regularity of the information provided to the committee directly determine the effectiveness of oversight, hence the value of relying on reliable and traceable capital data.

The Ad Hoc Committee Clause

This establishes temporary or permanent committees tasked with assisting management on matters that are:

• recurring: recruitment, compensation, strategy, CSR (corporate social responsibility);
• occasional: financial operations, mergers and acquisitions, major disputes.

These committees make it possible to specialize deliberation and to involve certain shareholders in sensitive decisions without burdening the day-to-day operation of the management bodies.

The Shareholders' Non-Compete Clause

This restrictive provision prevents shareholders from engaging in activities that compete with the company. Because it significantly restricts professional freedom, its validity is strictly regulated. To be enforceable, it must be:

• limited in time (reasonable duration);
• limited in space (a defined geographic area);
• proportionate to the legitimate interests of the company;
• accompanied, where appropriate, by financial consideration.

A poorly calibrated non-compete clause is exposed to nullity: a measured drafting is preferable to an excessive and unenforceable clause.

The Exclusivity Clause

Operational shareholders undertake to devote their professional activity exclusively to the company. This clause generally complements the non-compete provisions: it aims to guarantee the full involvement of key shareholders, in particular the founders, during a period decisive for the company's development.

The Consequences Clause (Death of a Signatory)

This clause addresses the implications of the agreement in the event of the death of a signatory. It determines in particular:

• whether the heirs take over the deceased's obligations and accede to the agreement;
• or whether the agreement terminates entirely.

It is often combined with transfer mechanisms (purchase or sale undertakings) intended to allow the surviving shareholders to buy back the securities and to prevent heirs unconnected with the project from entering the capital. A digitized cap table greatly facilitates the handling of these situations by ensuring perfect traceability of the transmission.

The Termination Clause

Following the 2016 reform of French contract law, this clause specifies the consequences of the non-performance of obligations. It clarifies a crucial point: does termination affect the entire agreement or only certain clauses?

Precise drafting avoids debates over the scope of the sanction and protects the parties in the event of a serious breach. It benefits from being combined with a mechanism of prior formal notice (mise en demeure).

The Arbitration or Jurisdiction Clause

The parties may designate in advance the competent jurisdiction in the event of a dispute:

• Arbitration clause: often preferred for its confidentiality and speed, it entrusts the settlement of the dispute to an arbitral tribunal.
• Jurisdiction clause: it designates a specific state court. In France, its validity is subject to strict legal requirements, particularly with respect to territorial jurisdiction.

The choice between these two options depends on confidentiality concerns, cost and the nature of the anticipated disputes.

The Contractual Penalty Payment Clause

Shareholders may provide for a daily penalty for each day of delay (astreinte), that is, daily penalties applicable for as long as an obligation remains unperformed. Its objective is above all an incentive: to push the parties to meet their commitments on time, rather than to repair a loss already incurred.

The Penalty Clause

Penalty clauses set in advance a lump-sum compensation in the event of non-performance. This provision plays an incentive role with regard to the performance of commitments and constitutes, in principle, an exclusive remedy: the courts may not award additional damages beyond the agreed amount.

It should be noted, however, that the judge has the power to revise the amount when the sum provided for is manifestly excessive or derisory: the clause must therefore remain reasonable so as not to be challenged.

Shareholders' Agreement and Tokenization: Toward Native Governance

An agreement is only of value if its rules are actually applied. This is precisely where the tokenization of securities brings a breakthrough. By representing financial securities in the form of tokens on EVM blockchains, Equisafe makes it possible to embed certain rules of the agreement directly at the register level:

• Transfer control: a transfer can be made conditional on compliance with accession rules and transfer restrictions.
• Full traceability: each movement of a security is time-stamped and auditable, which secures the handling of sensitive situations (death, exclusion, exit).
• Compliance by design: our solutions are designed in accordance with the MiCA (Markets in Crypto-Assets) framework, the requirements of the AMF (the French financial markets authority) and institutional-grade security standards.

Beyond the agreement, these strengths address a well-known risk: that of a cap table managed on a spreadsheet, a source of errors, loss of history and disputes. A digitized and compliant capitalization table is the natural extension of a well-drafted agreement.

Conclusion

The operational clauses of the shareholders' agreement form the backbone of a company's governance: they define the rules of the game, organize powers and anticipate crisis situations. Their drafting deserves the greatest attention, ideally with the support of legal counsel.

For these rules to take full effect, they must rest on reliable, transparent and compliant capital management. This is the very purpose of Equisafe's solutions: to transform a paper agreement into truly enforceable governance, on a secure and regulatorily compliant blockchain infrastructure.

To go further:

• Everything you need to know about the appointment of a statutory auditor (commissaire aux comptes)
• The dematerialization of registers and general meetings
• The dangers of a cap table managed on Excel