An Analysis of Shareholder Agreements

35 Pages Posted: 10 Feb 2002

See all articles by Gilles Chemla

Gilles Chemla

Imperial College Business School; CNRS ; Centre for Economic Policy Research (CEPR)

Alexander Ljungqvist

Stockholm School of Economics; Centre for Economic Policy Research (CEPR); European Corporate Governance Institute (ECGI); Research Institute of Industrial Economics (IFN)

Michel A. Habib

University of Zurich; Swiss Finance Institute

Multiple version iconThere are 4 versions of this paper

Date Written: July 2004

Abstract

Shareholder agreements govern the relations among shareholders in privately-held firms, such as joint ventures or venture capital-backed firms. We provide an explanation for the use of put and call options, tag-along rights, drag-along rights, demand rights, piggy-back rights, and catch-up clauses in shareholder agreements. We view these clauses as serving (1) to induce the parties to make ex ante investments, (2) to preclude ex post transfers by the party that has the ability to engage in such transfers, and (3) to achieve the efficient ex post allocation of stakes in the firm.

Keywords: Shareholder Agreements, Put Options, Call Options, Pre-emption Rights, Catch-up Clauses, Drag-along Rights, Demand Rights, Tag-along Rights

JEL Classification: G34

Suggested Citation

Chemla, Gilles and Ljungqvist, Alexander and Habib, Michel A., An Analysis of Shareholder Agreements (July 2004). NYU, Ctr for Law and Business Research Paper No. 02-01; RICAFE Working Paper No. 006, Available at SSRN: https://ssrn.com/abstract=299420 or http://dx.doi.org/10.2139/ssrn.299420

Gilles Chemla (Contact Author)

Imperial College Business School ( email )

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CNRS ( email )

Dauphine Recherches en Management
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Centre for Economic Policy Research (CEPR)

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Alexander Ljungqvist

Stockholm School of Economics ( email )

111 60 Stockholm
Sweden

Centre for Economic Policy Research (CEPR)

London
United Kingdom

European Corporate Governance Institute (ECGI)

c/o the Royal Academies of Belgium
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Belgium

Research Institute of Industrial Economics (IFN) ( email )

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Michel A. Habib

University of Zurich ( email )

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Switzerland
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41-44-634-4903 (Fax)

HOME PAGE: http://www.isb.uzh.ch/institut/profs/mhabib.htm

Swiss Finance Institute ( email )

c/o University of Geneva
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CH-1211 Geneva 4
Switzerland

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