More shares, more power
It may seem an obvious statement but the greater the shareholding of an individual, the greater are his/her rights and the greater is his/her power within the Company. This is so not only because the larger the shareholding the more likely it is to represent a controlling interest, but also because the Companies Act affords greater rights and power to an individual as the size of his/her shareholding increases. For example, a shareholder owning 5% of a company has the right to have an item placed on the Agenda for discussion at the Annual General Meeting and, once the shareholder’s ownership reaches 10% of the company, he/she has the right to actually call a General Meeting of shareholders.
In the great majority of Limited Companies, a shareholding in excess of 50% of the issued share capital will be enough to control the company, dictate the makeup of the Board of Directors and to be able to do most of the acts necessary to run the company in its everyday business.
It is possible for those owning less than 50% of a company to protect themselves from being at the mercy of those holding over 50% of the shares in the company and this is one reason why shareholders should give serious consideration to agreeing a shareholders agreement or adopting professionally drafted Articles of Association.
A shareholders' agreement is an agreement between the shareholders of a company. In strict legal theory, the relationships between the shareholders (as between themselves) and between the shareholders and the company are regulated by the constitutional documents of the company. However, where there are a relatively small number of shareholders it is quite common in practice for the shareholder to supplement the constitutional document. There are a number of reasons why the shareholders must wish to supplement (or supersede) the constitutional documents of the company in this way: a company's constitutional documents are normally available for public inspection, whereas the terms of a shareholders' agreement, as a private law contract, are normally confidential between the parties. Contractual arrangements are generally cheaper and less formal to form, administer, revise or terminate. The shareholders might wish to provide for disputes to be resolved by arbitration, or in the courts of a foreign country (meaning a country other than the country in which the company is incorporated). In some countries, corporate law does not permit such dispute resolution clauses to be included in the constitutional documents. Greater flexibility; the shareholders may anticipate that the company's business requires regular changes to their arrangements, and it may be unwieldy to repeatedly amend the corporate constitution. Corporate law in the relevant company may not provide sufficient protection for minority shareholders, who may seek to better protect their position by using a shareholders' agreement to provide mechanisms for removing minority shareholders which preserve the company as a going concern.
1. Voting trust. A voting trust is a written agreement of shareholders under which all of the shares owned by the parties to the agreement are transferred to a trustee, who votes the shares and distributes the dividends in accordance with the provisions of the voting agreement. A copy of the trust agreement and the names and addresses of the beneficial owners of the trust must be given to the corporation. The trust is not valid for more then 10 years unless it is extended by the agreement of the parties.
2. Voting agreement. Rather then creating a trust, shareholders may enter into a written and signed agreement providing for the manner in which they will vote their shares. Unless the agreement provides otherwise, it will be specifically enforceable. It need not be filed with the corporation and is not subject to any time limit.
3. Shareholders’ management agreement. 
The shareholders may enter into agreements among themselves regarding almost any aspect of the exercise of corporate power (e.g. an agreement: eliminating the board and vesting board power in one or more persons, establishing shall be officers or director, requiring distributions on certain conditions, etc.). to be valid, the agreement must to be set forth in the articles, bylaws, or a written agreement approved by all persons who are shareholders at the time of its adoption. Such agreements are valid for 10 years unless they provide otherwise, but will terminate if the corporation’s shares become listed on a national securities exchange or are otherwise regularly traded on a national securities market.
4. Restrictions of Transfer of Stock. Stock transfer restrictions must be reasonable (e.g. a right of first refusal). A third-party purchaser is bound by the provisions of an agreement restricting transfer of stock if: (i) the restriction’s existence is conspicuously noted on the certificate (or is contained in the information statement required for uncertificated shares), or (ii( the third party had knowledge of the restriction at the time of the purchase.
