Inactive Shareholders Clause Samples
The Inactive Shareholders clause defines the rights and obligations of shareholders who are no longer actively involved in the management or operations of a company. Typically, this clause outlines criteria for determining when a shareholder is considered inactive, such as prolonged absence from meetings or failure to participate in key decisions, and may specify consequences like loss of voting rights or mandatory sale of shares. Its core function is to ensure that only engaged shareholders influence company decisions, thereby maintaining effective governance and preventing disruption from disengaged owners.
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Inactive Shareholders. (1) A Shareholder shall be deemed to be an Inactive Shareholder immediately following the occurrence of any of the following events (each a “Triggering Event”):
(a) If the Shareholder or a Principal of the Shareholder dies or has been declared missing for a period in excess of six months;
(b) If the Shareholder or a Principal of the Shareholder becomes incapable by reason of illness, disease, or other mental or physical disability for (i) a period of six consecutive months of discharging the usual duties of its business or employment, or (ii) for two hundred and seventy days in the aggregate during any period of three hundred and sixty-five consecutive days;
(c) If the Shareholder or a Principal of the Shareholder is determined by a court of competent jurisdiction to be unable to manage its own affairs;
(d) If the Shareholder or a Principal of the Shareholder has been convicted of any criminal offence by a court of final and competent jurisdiction and has been sentenced to imprisonment for a period aggregating in excess of thirty days;
(e) If the Shareholder or a Principal of the Shareholder has been convicted of a criminal offence involving moral turpitude, including, without limitation, theft, fraud, embezzlement, forgery, misappropriation or wilful misapplication or of an offence of a similar character involving dishonest acts;
(f) Upon the expiry of the time period referred to in Section 4.4, in the event of the non-compliance by the Shareholder with its provisions;
(g) Upon the expiry of the time period referred to in Section 5.3 in the event a Secured Party commences enforcement proceedings with respect to the Pledged Shares and its Debt is not repaid within such time period;
(h) If the Shareholder or a Principal of the Shareholder is declared bankrupt or makes a proposal in bankruptcy or becomes the subject of bankruptcy or other similar proceedings; or
(i) If the Shareholder or a Principal of the Shareholder makes an assignment for the benefit of creditors or otherwise acknowledges its insolvency.
(2) Each Shareholder or Principal, or in the case of death, incapacity or continuing status as a missing person, its executor, administrator, or other legal or personal representative (each being a “Representative”), shall give notice in writing to the Company promptly following the occurrence of a Triggering Event.
(3) From and after the date that a Shareholder becomes an Inactive Shareholder, the votes of such Shareholder shall be excluded for purposes ...
Inactive Shareholders. (a) A Shareholder shall be deemed to be an Inactive Shareholder immediately following the occurrence of any of the following events (each a “Triggering Event”):
(i) becoming mentally incapable for a continuous period of six months in any twelve-month period; or
(ii) bankruptcy or insolvency of a Shareholder.
(b) Each Shareholder or his executor, administrator, or other legal or personal representative, as the case may be, (each being a “Representative”), shall give notice in writing to the Corporation promptly following the occurrence of a Triggering Event.
Inactive Shareholders. 83 ARTICLE 12
Inactive Shareholders. For the avoidance of doubt, the provisions of this Article 11 and all other provisions of this Agreement do not, and shall not, apply to ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ or I.S.P (each, an “Inactive Shareholder”). The Inactive Shareholders will not have any Liability under this Agreement, the Ancillary Agreements or the transactions contemplated hereby or thereby, whether directly or for any obligations of the Active Shareholders, the Sellers, the Selling Parties Representative or any other party to this Agreement or any Ancillary Agreement, except with respect to any intentional fraud by such Inactive Shareholder or (in the case of ▇▇▇▇▇ ▇▇▇▇▇▇▇▇) in accordance with the Noncompetition Agreement signed by him.
Inactive Shareholders. A Shareholder is an inactive Shareholder (an “Inactive Shareholder”) following the occurrence of any of the following events (each an “Inactive Event”): the Shareholder is subject to a Triggering Event and becomes a Defaulting Party, but remains a Shareholder following the application of Section 6.3; the death of a Shareholder or Principal; or the Shareholder or Principal resigns his or her employment with the Corporation or the employment is terminated by the Corporation for any reason or cause. Each Inactive Shareholder must give notice to the Corporation promptly following the occurrence of an Inactive Event. If a Shareholder becomes an Inactive Shareholder, then from the date of the Inactive Event, the Inactive Shareholder and its Permitted Transferees: have no right to receive information about the Corporation under Section 3.10 of this Agreement or otherwise, except as required under the Act and this Agreement; have no right to subscribe for any offering under Section 6.1; to the extent they are not already a Minority Shareholder, their Shares shall be subject to the voting power of attorney in Section 3.8 in the same manner as if they were Minority Shareholders for as long as the Shares are held by the Inactive Shareholder or its Permitted Transferees; and in the case of Section 7.3(1)(a), will be obliged at the sole option of the Corporation, exercisable by the Corporation within [90 days] after employment ceases, to sell all of the Shares of that Inactive Shareholder at fair market value to the Corporation or as the Corporation may direct. Fair market value shall be determined by negotiation, and failing a negotiated price by a third party arbitrator selected and paid [equally] by the Corporation and by the Inactive Shareholder selling the Shares. If the Shares of the Inactive Shareholder are also subject to repurchase rights under the ESOP, the Corporation shall be entitled to elect whether to apply the provisions of this Agreement or the ESOP in respect of all the Shares held by the Inactive Shareholder. GENERAL