Shareholders agreements

The structure for running a Limited company is set out in its Memorandum and Articles of Association as registered at Companies House. However, in a small privately owned company, this does not give the owner the necessary protection and appropriately document the relationship between shareholders.

What are shareholders agreements?

Shareholders agreements are, as you might expect, an agreement between the shareholders of a company. It can be between all or, in some cases, only some of them. Its purpose is to protect the shareholders’ investment in the company, to establish a fair relationship between the shareholders and govern how the company is run.

Why shareholders agreements are important?

It is vital that the shareholders in a business prepare Shareholders Agreements which document what happens if:

  • A shareholder wants to leave, how the relationship is terminated, how the assets are valued and whether the shares remain with the shareholder or whether they are required to return to the company
  • Similarly, if a shareholder dies what happens to his shares, how they are valued and whether they are passed to his beneficiaries or whether they are required to come back into the company
  • What happens if there is an arm’s length transfer of shares or an offer for the company
  • On a day to day basis, how the business is run and what decisions need to be unanimous and what can be left to individual shareholders

How can we help with shareholders agreements?

Our business services team have prepared Shareholders Agreements for all sizes of companies and we understand that all companies are not the same.

We offer you a free initial meeting to discuss the areas of importance for your company and supply you with a checklist identifying those topics which shareholders should discuss and agree on at the time of forming a business.

In many circumstances, we can offer you a fixed fee for drafting a Shareholder’s Agreement and putting in place protections you need. For assistance Contact us on 01206500181.