Shareholders: Rights and Precautions

This technical note addresses the rules of governance in public limited companies (PLC) and limited liability companies (LLC) and the exercise of corporate powers. The methods of governance incorporated in company bylaws and shareholders' agreements are described from legal and practical standpoints. In particular, the note describes the rights ascribed to minority shareholders and the precautionary measures that must be taken prior to investing in a company as a minority holder. It also shows how the structure of share ownership, governance agreements between shareholders and the exit opportunities available to the latter are areas crucial to a company's harmony and decision-making capacity. Preparedness for shareholder conflicts is key to preventing disjointed and exclusionary contexts that supersede a company's normal capacity to regulate its business activities and thereby seriously endanger its future.