The Effectiveness of Shareholders' Agreements: Between the Durability of the Commitment and the Guarantees of Enforcement

Abstract

Shareholders’ agreements now play an essential role in contemporary company law owing to the flexibility they offer compared with traditional articles of association. Initially conceived as merely ancillary agreements, they have gradually evolved into instruments for structuring corporate control, regulating voting rights, and governing the transfer of shares.

This study examines the effectiveness of shareholders’ agreements under Lebanese law in light of French law, focusing on three main issues: the stability of commitments over time, the limits of their enforceability against the company and third parties, and the mechanisms designed to ensure their performance.

The study shows that fixed-term shareholders’ agreements provide greater contractual stability, particularly when their duration is aligned with that of the company, whereas agreements of indefinite duration remain vulnerable due to the risk of unilateral termination. It also highlights the evolution of case law towards strengthening the enforceability of such agreements, notwithstanding the principle of privity of contract.

Finally, the study examines preventive contractual mechanisms, as well as the development of case law favouring specific performance where monetary compensation proves insufficient to preserve the balance among shareholders.

The study concludes that a clearer legal framework is needed under Lebanese law to ensure a proper balance between freedom of contract and the mandatory rules of company law.