Our corporate solicitors are specialists in advising businesses on shareholders agreements
Shareholders agreements formalise and regulate the relationship between a company’s shareholders and sets out their various rights, obligations and responsibilities within a private, legally binding document. They can cover a wide range of issues:
- business succession, and
- long term strategy.
Such agreements are important because even if the shareholders currently get along, that might not always be the case. Changes to the business and changes in circumstances can affect the relationship between shareholders and not always positively.
A properly drafted shareholders agreement will provide an exit mechanism that will be invaluable when the right time comes for a parting of the ways.
A shareholders agreement provides greater depth and clarity than a company’s Memorandum and Articles of Association. However, if a shareholders agreement doesn’t exist, then it is the Memorandum and Articles of Association that regulates the relationship between shareholders and their company.
The Memorandum and Articles of Association are publicly available but shareholders agreements are private and more detailed, and as such, they offer greater protection to shareholders.
Some of the detail that goes into shareholders agreements includes:
- The Voting rights of shareholders
- Dividend Payments
- The transfer of shares between shareholders or groups of permitted transferees (e.g. spouses, children)
- The terms of exit
- Termination of the shareholders agreement and what happens in the event of bankruptcy or death of shareholders
- The valuation of shares on a transfer
- The rights of the shareholders to receive additional shares
- The rights of specific shareholders to purchase additional shares or sell shares on the triggering of certain events or achieving certain conditions
As can be seen from this list, shareholders agreements can be lengthy and complex to draft if they are to be accurate and comprehensive. However, their value, particularly in helping to avoid disputes between directors and shareholders, is significant.
New shareholders agreements are often needed following a business sale or acquisition, and our team of experienced solicitors will work closely with you to ensure the agreement satisfies the requirements and objectives of all parties.
If you need help and advice for a new or changed shareholders agreement, please contact us or call us on +44(0)121 214 2490 for a FREE initial discussion.