Shareholders Agreements FAQs

The Most Frequently Asked Questions For Shareholders’ Agreements

A Shareholders’ Agreement is a contract between shareholders of a business in order to set out any agreed matters between the involved parties.

At Tinsdills we have valuable know-how and experience in drafting these exact agreements, whether they are simple or more complex, and we are able to negotiate terms to suit your specific needs – ultimately providing valuable peace of mind for the shareholders involved.

As with much of Business Law, Shareholders’ Agreements can bring up many questions – and our team of experts are here to provide you with all of the information and guidance you might need.

Below you will find the most frequently asked questions regarding Shareholders’ Agreements, and accurate, up-to-date answers for each of them. Want to ask another question? Feel free to get in touch with us today.

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    Shareholders’ Agreements Frequently Asked Questions

    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.