The Agreement is a serious legal document; even THOUGH the Company is a family business. As a lawyer, I have seen a lot of disputes among family members in relation to companies operation; especially the company becomes more and more successful. Therefore, please discuss and negotiate with your business partners seriously and carefully.

Legally speaking, shareholders of a company are equal parties. Shareholder may put all mutually agreed clauses in the shareholder agreement. In essence, shareholder agreements are contracts among shareholders.

In general, shareholder agreement should answer the questions as follows:

Who owns (or will own) shares (i.e. the parties to the agreement)

Are shareholders allowed to pledge or hypothecate their shares?

Who is on the Board? What about outside board members?

Who are the officers/managers?

What constitutes a quorum for meetings?

What are the restrictions on new equity issues, e.g. anti-dilution aspects, pre-emptive rights and tag-along provisions?

How are ownership buyouts to be handled?

How are disputes to be resolved among shareholders? (Arbitration clause?)

As for foreign invested company, what is the applicable law?

How are share sales handled? e.g. first right of refusal

What are shareholders' obligations and commitment? (Conflict of interest or commitment? Full-time or)

What are shareholders' rights? (What information, financial statements, reports, etc.can shareholders access?)

What happens in the event of death/incapacity?

How is a share valuation determined (e.g. to buy out an estate in the event of death)

Is life insurance required? e.g. funding for purchase of shares from estate or for key person insurance

What are the operating guidelines or restrictions (budget approvals, spending limits banking, etc?)

what types of decisions require unanimous board and/or unanimous shareholder approval?

compensation issues - remuneration of officers & directors, dividend policies

are other agreements required as well, e.g. management contracts, confidentiality agreements, patent rights, etc?

should there be any restrictions on shareholders with respect to competing interests?

what could trigger the dissolution of the business?

what is the liability exposure and is there any corporate indemnification (and insurance)?

who are the company's professional advisors (legal, audit, etc.)?

are there any financial obligations by shareholders (bank guarantees, shareholder loans, etc)?

Who is responsible for the incorporation?

How the incorporation cost is covered?