The tax consequences of these two regimes are different. In the past, the second method offered a valuable tax savings opportunity for the deceased, but not so favorable to surviving shareholders. Today, the situation is less clear due to updates to the Income Tax Act 1995 with regard to the tax treatment of losses. The complexity of shareholder agreements is such that they should not be drawn up by shareholders, but only by professionals experienced in the design of such agreements. Investor protection: Investors take a risk for their investment, as they may not recover the funds they have invested in the company and therefore often require shareholders to agree on certain provisions to protect their position. For example, they may require that the company`s performance objectives be met within a set period of time and, if those objectives are not met, the investor has the option of demanding certain measures or having the opportunity to take control of the business. These provisions are often found in a shareholders` agreement. The impasse is a situation in which two shareholders or two groups of shareholders are unable to agree on certain key issues. A deadlock occurs when general meetings are not adopted repeatedly because one group of shareholders refuses to participate, or when a group of shareholders votes or abstains on a proposal for a decision of the other group.

The purpose of a shareholders` agreement is to regulate the relations between shareholders and to determine the rights and obligations of shareholders. The size of a shareholders` agreement can vary widely. Some set only one method to redeem another shareholder in the event of a dispute. Others look at the consequences of a shareholder`s death. Others establish rules for the definition of company policy and management. Still others give certain shareholders the right to acquire or dispose of shares in certain circumstances. Often, agreements combine all or more of these aspects. The weakness of the concept of a simple sale of shares of the deceased is to find the money. As a rule, while they have just lost an active shareholder, neither the surviving shareholders nor the company itself have sufficient cash to pay for the shares.