A Shareholders Agreement is an agreement made between shareholders of a private company governing the relationship between them and setting out rules on how the company is to be run. Sometimes, these agreements can be appropriate where you are setting up a company with someone else, perhaps even family or friends. You may also need a Shareholders Agreement when a third party wishes to invest in your company.
Shareholders Agreements are highly bespoke documents that can range from the very simple to the very complex. Such agreements might include clauses that:
There may also be particular provisions that need to be included in your Shareholders Agreement and so legal advice should be sought at an early stage. Everyman Legal can assist you in preparing a Shareholders Agreement that works alongside your Articles of Association of your company to protect both you and your business.
If you are the majority shareholder – how might a Shareholders Agreement benefit you?
A Shareholders Agreement might include a “drag along” provision allowing you to force a minority shareholder to sell their shares if and when you wanted to sell your shares. This then provides you with the option of Selling your Business at the time most appropriate for you.
In addition, you might want to include a confidentiality provision in order to stop minority shareholders from disclosing information about the company and its business to third parties.
Is there an alternative to a Shareholders Agreement?
You may well find that, rather than using a Shareholders Agreement, you can instead secure all the protection you need through your company’s Articles of Association. These may include many of the same provisions as a Shareholders Agreement, including a drag along provision, so this could save you both time and money.
The Everyman Legal Resources area has been introduced in response to our solicitors' frustration at not being able to assist business people and individuals who need to create legal documents but do not have the budget to engage a solicitor to provide them with a fully bespoke service.
Our documents are designed to be flexible and easy to amend. Accordingly, no template documents for sale through our website include any non-standard formatting.