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Shareholder Agreements

 

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Shareholder Agreements

Companies are free to decide whether or not to put in place shareholder agreements. Those that do benefit from the clarity and certainty that comes with formally agreed arrangements.

 

A shareholder agreement is a private document which supplements the company’s Articles of Association and sets out the rights and responsibilities of company members. Terms usually deal with:

 

•  Voting rights

•  Transfer of shares

•  Valuation of shares

•  Dividend policy

•  Restrictions on certain board decisions

•  What happens if members don’t agree

•  Expulsion of members

•  Exit terms

•  What happens on death or bankruptcy

•  Dispute resolution.

 

It is up to the company's members to agree exactly what goes into the agreement.  As these negotiations will shape their future relationship, it’s vital that parties are properly advised at the outset.

 

Making these agreements comprehensive helps to avoid disputes and it means that the arrangement sets off on the best possible footing with each party understanding their role and what is expected of them. 

 

For minority shareholders, these agreements can offer significant protection if terms can only be amended with the agreement of all shareholders.

 

For companies, well constructed agreements help regulate management and provide for efficient operating systems.  They can also restrict shareholders’ activities once they have left.

 

Our commercial solicitors are expert in drafting, negotiating and advising on the terms of these agreements. 

For more information please contact:
Bells Solicitors Limited.   Registered in England and Wales no. 07827988.   Authorised and regulated by the Solicitors Regulation Authority.   SRA number 569030.   VAT registration number 137595285