Shareholders’ Agreements: Do You Need One?
Whether you are starting a new venture or operating an existing business, it is important to consider your relationships with the other people involved.
A shareholders agreement may not seem relevant to you right now, particularly if you have gone into business with family or friends you trust. However, situations can quickly escalate, and if the relationships soured in the future or the dynamics changed, a shareholders’ agreement can provide the shareholders, and the company, with protection.
In addition to helping to avoid or resolve costly disputes, a shareholders’ agreement can govern how the company is run, regulate the sale of shares and define how important decisions will be made, ensuring a fair relationship between the shareholders. This clarity can help to ensure a business’s ongoing success and save a lot of unnecessary stress and arguments.
Tailored to the needs of the company and the shareholders, an agreement can set out:
- Shareholder rights and obligations
- How the company should be run
- How shares in the company can be transferred and issued
- Matters and decisions requiring shareholder consent (providing protection for minority shareholders)
- Restrictions on shareholders to be engaged or employed by any other business
- What happens if specific events occur (for example a dispute between the shareholders)
Although it is not a legal requirement for a limited company to have a shareholders agreement, the protection offered can be invaluable. It is usually best to put an agreement in place when the company is first set up. However, whether the business has been going two days or 20 years, it is never too late to put an agreement in place. Drawing together the expectations of the shareholders and documenting the mutual arrangements can help to create a stable foundation for future decisions and strategies to be formed.
If you are a business owner and need a bespoke, shareholders agreement for your business, then please contact GA’s commercial team today. You can contact me directly via serena.willis@GAsolicitors.com or by calling 01752 203500.
GA Solicitors’ company commercial team has decades of experience in drafting shareholders’ agreements for a diverse range of businesses. These have varied from concise agreements for family run, small businesses, through to multi-million pound organisations requiring complex detail and documentation.
If you are already facing a shareholder dispute, then you can read more about our business disputes team and how they can help here.
If your business is an LLP or partnership and you need a partnership agreement then you can read more about this here.
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