A shareholders’ agreement is the agreement between the shareholders of a limited company.
It sets out the obligations and rights of the shareholders, details how the company will be run, regulates the sale of shares, defines how important decisions will be made and provides protection for the minority shareholders and the company.
This important agreement should be carefully considered by all parties and written by an experienced company commercial solicitor to ensure both the shareholders and the company are protected.
Why are shareholder agreements important?
While shareholder agreements are not a legal requirement, they are a vital tool for shareholders and well worth any cost involved.
Although you might not anticipate having a disagreement when you first enter into a business relationship, the future cannot be predicted. Shareholder agreements offer vital protection should disagreements arise and views begin to diverge further down the line. The act of creating a shareholder agreement can also prevent these disputes from arising, as the process of drawing up the agreement will give those involved the chance to identify potential differences before they come to a head.
Shareholder agreements also establish how decisions will be made within the business. You can agree ahead of time that a certain number or percentage of shareholders have to express their consent for important decisions to be agreed. This can eliminate delays and disputes at critical moments for the business.
What is included in a shareholder agreement?
Each shareholder agreement is unique to the business and its shareholders, however most will focus on a number of common areas including:
- Restrictions on shareholder actions such as whether a leaving shareholder can compete with the company post departure.
- Procedures for dispute resolution.
- Rules on issuing and transferring shares. Shareholders may wish to restrict who can/cannot acquire shares in the company.
- Protection for minority shareholders in terms of consent and decision making.
GA Solicitors’ corporate and 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If you are looking to start up a business, or feel that your existing agreement may be out of date or has been overlooked; contact us for a no obligation discussion.
Highly ranked in both The Legal 500 and Chambers UK, you can be assured you will receive the best possible legal advice, with a strong commercial focus, and the highest levels of client service.
Speak to our corporate and commercial team today on 01752 203500 to see how they can help. Alternatively, email enquiries@GAsolicitors.com