49 COMMERCIAL LAW Shareholders’Agreements in Family Businesses* Ecem Çetinyılmaz Introduction Family businesses, in the simplest definition, are companies in which the company shares, or the authority to manage the company, belongs to various members of a family. The most significant issues that must be addressed in these companies are institutionalization, and the prevention or minimization of the effects of disagreements between family members on company activities. In ensuring the institutionalization of the company, it is not always sufficient for family members to be aware of their duties and responsibilities in the company and to comply with them in good faith, and legal instruments that have a binding effect and sanctioning power over the relevant family members become necessary in most cases. In this regard, one of these instruments is the shareholders’ agreements. Why Do Families Need a Shareholders’Agreement? In family businesses, an agreement that sets the rules for the conduct and management of the company’s activities is most often needed in the second generation, when the number of the family members who are shareholders tends to increase. In this agreement, the mutual rights and obligations of the shareholder family members regarding the company are established. This is intended to prevent conflicts that may arise between the shareholders from the very beginning, by complying with predetermined principles and procedures, such as, for example, how a decision will be adopted on an important issue for the future of the company, or how the company shares may be transferred to other family members or to third parties and, ultimately, to ensure the long-term sustainability of the company. * Article of May, 2021
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