A Shareholders’ agreement (SHA) in a company is a private document unlike the Articles ofAssociation (AOA). For the maintenance of confidentiality of terms, the parties are motivated to enterinto an SHA. The main advantage of entering into a separate SHA instead of incorporating the termsof agreement in the AOA is maintenance of confidentiality. Shares of a company are considered to bemovable property. Shares of the company are also personal property. One of the rights attached toproperty is the right to transfer the property. Transfer of property Act, 1882 states that if you havea title to the property, you have the right to transfer it or restrict the transfer. The law involved in thelandmark judgement of the case of V B Rangraj v Rang raj B Gopalakrishnan is perplexing. Here thecourt has not allowed the formation of private contracts between the shareholders in privatecompany. Transferability of shares changes the corporate structuring according to the nature andproportion of shares involved in such transfer.
