A shareholder's agreement is just a contract determining the liaison between the shareowners of a business or a company. A shareholder's agreement in India comprises the rights and duties, reallocation of shares, operations of the business, and how crucial verdicts and decisions are made.

A shareholder agreement's purpose is to protect and treat shareholders equally, as well as to allow them to make decisions about third parties who may become shareholders in the future. A shareholder agreement is more important to minority shareholders than it is to majority shareholders because it emphasizes the majority shareholders' commitment to protect minority shareholders from abuse and provide them a voice when important decisions are made.