Private Equity Shareholders Agreement Template for Hong Kong

The Private Equity Shareholders Agreement is a critical document used when a private equity firm makes an investment in a target company in Hong Kong. It serves as the fundamental framework governing the relationship between the PE investor(s), existing shareholders, and the company, typically implemented following the completion of due diligence and alongside the investment's closing. The agreement must comply with Hong Kong's legal framework, particularly the Companies Ordinance and Securities and Futures Ordinance, while incorporating common law principles. It addresses crucial aspects such as corporate governance, shareholder rights, transfer restrictions, exit mechanisms, and minority protections. This document is essential for protecting the interests of all parties and establishing clear operational guidelines for the company post-investment.

1. Parties: Identification of all parties to the agreement including the company, PE investor(s), and existing shareholders

2. Background: Context of the investment, company history, and purpose of the agreement

3. Definitions and Interpretation: Detailed definitions of terms used throughout the agreement and interpretation rules

4. Completion and Conditions Precedent: Details of investment completion requirements and conditions that must be met

5. Capitalization and Shareholding Structure: Details of share capital, classes of shares, and shareholding percentages

6. Board Composition and Management: Board structure, appointment rights, and management provisions

7. Reserved Matters: Decisions requiring special approval from PE investors or specific shareholder groups

8. Information Rights: Rights of shareholders to receive financial and operational information

9. Transfer Restrictions: Limitations on share transfers and required procedures

10. Exit Rights: Provisions for IPO, trade sale, or other exit mechanisms

11. Tag-Along and Drag-Along Rights: Rights of shareholders to participate in or be forced to join in sales

12. Anti-Dilution and Pre-emptive Rights: Protection against dilution and rights to participate in new issues

13. Dividend Policy: Rules governing dividend declarations and distributions

14. Confidentiality: Obligations regarding confidential information

15. Non-Competition and Non-Solicitation: Restrictions on competitive activities and employee solicitation

16. Term and Termination: Duration of the agreement and termination provisions

17. Governing Law and Dispute Resolution: Applicable law and methods for resolving disputes