Where the articles of association determines the relationship between the company and its shareholders, the shareholders’ agreement is a private agreement between the shareholders themselves. The shareholders’ agreement, compared to the articles of association, provides a more flexible instrument to structure the relationship among the shareholders. In principle, a shareholders’ agreement merely creates a contractual relationship, and is not directly bound by mandatory provisions of Dutch Caribbean company law. The company’s articles of association on the other hand are subject to such mandatory provisions. Also, in certain situations, the shareholders’ agreement as a contractual relationship can have so-called ‘corporate effect’, i. e. that these agreements also have an effect on the company itself. Resolutions of the corporate bodies of the company may then be challenged in court if such resolutions have been taken in violation of provisions of the shareholders’ agreement.
The shareholders’ agreement will often be a further elaboration of the articles of association. However, parties do not have to limit themselves to only the subjects stipulated in the articles of association. Agreements are often made about the organization and objective of the company, capital and governance, and the way in which shareholders will cooperate with each other. More specifically, a shareholders’ agreement will typically include provisions on: appointment of managing and supervising directors; exercise of voting rights (e.g. that a shareholder has to exercise his voting right in a certain manner); sale of shares (e.g. drag-along and tag-along arrangements); price of shares in the sale (e.g. how the value of the shares should be determined and with which valuation method); capital contribution (e.g. requiring the shareholders in certain situations to contribute additional capital); and dispute resolution (e.g. a mechanism for the resolution of disputes between the parties involved).
Note that shareholders’ agreements typically include provisions that parties do not wish to be included in the articles of association. This is because the articles of association are public and binding on all shareholders and the company, while shareholders’ agreements may include confidential information and may only be binding for those shareholders that are party to the agreement. The content of the shareholders’ agreement does not have to be consistent with the articles of association. In connection with this, it is common practice to include a provision stating that in the event of conflict between the articles of association and the shareholders’ agreement, the terms of the shareholders’ agreement will prevail.