There is no substitute for good corporate governance. Even small businesses with few shareholders are better served by good governance practices. Instead of trying to anticipate any future event or try to be overly prescriptive, a structure that ensures the installation of an experienced board of directors is probably the best approach. What for? Directors are responsible to the company – NOT to shareholders, as is generally believed. If the directors of this mandate complete in a serf way, many problems can be solved. When an agreement provides for the regulation of the corporate governance of a listed company or its controlling company when an agreement governs the corporate governance of a listed company or its controlling entity, it must be held by its shareholders in accordance with Articles 122 and 123 of the Uniform Finance Law (Dlgs 58/98). The partners appoint the directors, who then appoint the management. Directors are the “soul” and conscience of the company. They are responsible for their actions.
Shareholders are not responsible for corporate actions. Management may or may not be held responsible for business activities. Often these roles are assumed by the same people, but when a business grows and grows, it cannot be. When a company is created, its founding shareholders determine how a company becomes the ownership and management of a company. This is done in the form of a “shareholder pact.” When new shareholders, such as angelic investors, are going to want to be part of the agreement, and they will most likely add complexity. For example, they may want to impose vesting conditions and mechanisms to ensure that they eventually withdraw and get a return on their investment. If it does not have such an agreement, it can lead to serious problems and litigation and companies in a situation of failure. It`s a bit of a marital arrangement.
In strict legal theory, the relationship between shareholders and those between shareholders and the company is governed by the company`s constitutional documents. [Citation required] However, for a relatively small number of shareholders, such as in a start-up, it is common in practice for shareholders to complete the constitutional document.