Shareholder relations

A shareholders’ agreement is an agreement between the owners of a company which governs the business relationship between the company and each of its shareholders.

One of the key benefits of a shareholders’ agreement is the certainty it provides around how shares are to be dealt with in a variety of situations; for example, if a shareholder wishes to leave, dies or becomes ill, ensuring costly disputes are avoided in a potentially difficult situation, as the shareholders have already agreed how to deal with these issues up-front.

Common matters covered by a shareholders’ agreement include:

  • Restrictions on the nature of the business of the company
  • The entitlement for the shareholders to either be directors of the company or to appoint and remove a nominated director.
  • Matters which require the consent of all or a specified percentage of the shareholders, for example the recruitment of new staff, sales and acquisitions of assets beyond a certain value, borrowing money, opening new offices or premises.
  • Apportionment of the liability between the shareholders for any personal guarantees they have been required to give
  • Restrictions on the issue of new shares
  • Restrictions on the transfer of existing shares
  • Options for the shareholders to acquire each other’s shares in certain circumstances
  • Provisions for what is to happen on the retirement, death or incapacity of a shareholder
  • Provisions as to how shareholders will vote on resolutions
  • Provisions to prevent shareholders from competing with the business of the company
  • The policy for the payment of dividends

A company’s constitution (known as its articles of association) should also be considered when contemplating a shareholders’ agreement, to ensure that these documents work together with each other and do not contain conflicting provisions.

Our aim is always to create a workable solution both at the time the agreement is put in place, and for the future – we take time to understand your ambitions for the business, ensuring documentation created caters for your future plans.

Your Specialist for Shareholder relations is...

Richard James Partner

Specialises in:
Corporate Finance, Franchising, Technology and Media Contracts and Intellectual Property

01935 385963
[email protected]