Trusted Solicitors For Shareholders’ Agreements
A shareholders’ agreement is a contract between the shareholders of a company setting out agreed matters between them. We have vast knowledge and experience in drafting agreements, both simple and complex, and can negotiate and draft such terms to suit your needs and to provide peace of mind between shareholders. Other business law services at Tinsdills include:
Tinsdills recently expanded this department following an acquisition of Grindeys Solicitors
Shareholders’ Agreements With Tinsdills
A shareholders’ agreement is a contract between the shareholders of a company setting out agreed matters between them, such as:
- how shares can be transferred;
- rights of first refusal;
- decisions on which all shareholders must agree;
- how dividends are payable;
- non-compete restrictions and exit plans.
Shareholders’ agreements can provide protection to minority shareholders, achieve control for majority shareholders and provide a default position to fall back on in certain situations. By entering into a shareholders’ agreement which regulates the dealings of shareholders, those shareholders inevitably reduce the risk of future dispute between them or, at least, provide a structured way to deal with any such dispute.
In addition to preparing a bespoke shareholders’ agreement, it is important to ensure that your company’s articles of association are consistent with that shareholders’ agreement to avoid uncertainty or conflict in the future and to ensure the agreement between the shareholders on matters such as transmission, share transfers and director decision-making are consistent.
At Tinsdills Solicitors, we have a team of specialist business law solicitors who can negotiate and prepare a shareholders’ agreement that is tailored to the needs of the shareholders.
No, but we would always advise that one is entered into as, if you do not have a shareholders’ agreement in place, your rights and obligations will derive primarily from your company’s constitution and from statute and the common law, which may not properly address issues which are important to you as a shareholder.
Companies and their shareholders may elect to enter into a shareholders’ agreements for any number of reasons, including (but not limited to): the desire for certainty around what will happen in various circumstances not fully dealt with in the model articles of association or statute law (for example, protections for investor or minority shareholders); and the desire to keep certain agreed terms confidential (as the company’s constitution is a public document and so may not be the best place to formally document private terms).
A shareholders’ agreement will usually cover a range of areas relevant to the overall ownership of the company and specific decision making. This might include decisions which require either a majority or unanimous vote which (by the directors and/or by the shareholders); when and how shares in the company can be issued or sold (and the process for doing so); any events which might trigger a compulsory transfer of shares; and how disputes between the shareholders will be resolved.
This may sound like a relatively straightforward document but, shareholders’ agreements can be complex and the provisions contained in them will usually be quite detailed in order to ensure certainty for future enforcement of the same, if and when necessary.
Whether or not you will need to review your articles of association when entering into a shareholders’ agreement will depend on whether you are including any provisions in conflict with those terms set out in the articles of association. Generally, the articles of association will flow from and expand on (or, where appropriate and legal to do so, amend) the relevant provisions from the Companies Act 2006 and the shareholders’ agreement will expand upon the company’s articles of association. It is fairly common to include provisions in the shareholders’ agreement that are ancillary to the terms of the articles of association but which you wish to remain confidential for whatever reason.
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