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Silent Shareholder Agreement
"I need a Silent Shareholder Agreement for my Malaysian tech startup where an angel investor will invest RM 500,000 for a 15% stake but wants no involvement in day-to-day operations, with profit distribution to occur quarterly starting March 2025."
1. Parties: Identification of the active shareholders, silent shareholder(s), and the company
2. Background: Context of the agreement, including company information and purpose of the silent shareholder arrangement
3. Definitions: Key terms used throughout the agreement
4. Investment Amount: Details of the silent shareholder's capital contribution and payment terms
5. Profit Sharing and Distribution: Framework for calculating and distributing profits to the silent shareholder
6. Rights and Limitations of Silent Shareholder: Clear delineation of the silent shareholder's rights and restrictions on involvement in management
7. Management and Control: Confirmation that management control remains with active shareholders
8. Information Rights: Silent shareholder's rights to financial information and company reports
9. Confidentiality: Obligations regarding confidential information and trade secrets
10. Transfer Restrictions: Limitations on transferring the silent shareholder's interest
11. Term and Termination: Duration of the agreement and circumstances for termination
12. Exit Provisions: Mechanisms for the silent shareholder to exit the arrangement
13. Governing Law and Jurisdiction: Specification of Malaysian law as governing law and jurisdiction for disputes
1. Tag-Along Rights: Used when the silent shareholder wants the right to join in any sale by major shareholders
2. Drag-Along Rights: Include when majority shareholders want the right to force the silent shareholder to join in a sale
3. Anti-dilution Protection: Include when the silent shareholder requires protection against future share issuances
4. Right of First Refusal: Optional provision giving existing shareholders first right to purchase if silent shareholder wishes to sell
5. Put Option: Include when the silent shareholder wants the right to force the company/other shareholders to buy their shares
6. Call Option: Used when the company wants the right to buy out the silent shareholder under specific circumstances
7. Deadlock Resolution: Include when specific voting rights are granted to silent shareholder in extraordinary circumstances
8. Non-Compete Clause: Include when there's a need to restrict the silent shareholder from competing activities
1. Schedule 1: Company Information: Detailed company information including registration details, share capital structure, and existing shareholders
2. Schedule 2: Investment Details: Specific terms of the investment including amount, payment schedule, and valuation details
3. Schedule 3: Profit Calculation Method: Detailed methodology for calculating distributable profits and silent shareholder's share
4. Schedule 4: Information Rights Details: Specific financial reports and information the silent shareholder is entitled to receive
5. Schedule 5: Exit Valuation Methods: Agreed methods for valuing the silent shareholder's interest upon exit
6. Appendix A: Shareholders' Resolution: Copy of shareholders' resolution approving the silent shareholder arrangement
7. Appendix B: Board Resolution: Copy of board resolution approving the silent shareholder arrangement
Authors
Technology Startups
Real Estate
Manufacturing
Food and Beverage
Retail
Professional Services
Healthcare
Education
Construction
Agriculture
Family Businesses
Small and Medium Enterprises
Legal
Finance
Corporate Governance
Executive Leadership
Investment
Risk Management
Company Secretariat
Board of Directors
Shareholder Relations
Compliance
Chief Executive Officer
Chief Financial Officer
Company Director
Managing Director
Investment Manager
Legal Counsel
Corporate Lawyer
Company Secretary
Finance Director
Business Development Manager
Private Equity Manager
Venture Capital Manager
Investment Advisor
Corporate Governance Officer
Risk Management Officer
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