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Shareholders Agreement

1. The need for Shareholders Agreement 


​A company in the UK would ordinarily have more than one shareholder in most cases and when they enter into such an agreement it is important to foresee there being a scenario in which the business partners are finding it difficult to make a decision.


A shareholding agreement can provide to you a default position on the decision-making process within your business and is a vital document to ensure that your business can continue growing without you and your shareholders falling out and affecting the business.


This is a private document between you and your business partners and is not one which needs to be added to the public domain on Companies House.


In the event that you have directors who are not shareholders and you as a shareholder want a say in how the company is operated then such an agreement could cover that scenario and is useful to ensure that you continue to have a say in how the company is run even though you are not on the board of directors.


A shareholder’s agreement can also protect both a minority shareholder and a majority shareholder.


A key factor which is contained in any shareholding agreement is control the transfer of shares, it can provide you with a mechanism where if one of the shareholders wishes to sell or transfer the shares you get a right of first refusal over those shares. These sort of provisions can be used to restrict who may or may not acquire a share in your business and it can also be a useful tool for small businesses that may wish for the initial shareholders to retain their interests in the business rather than allowing new incoming shareholders which could lead to problems later.


Another important factor which can be included in your shareholders agreement is to have specific provisions on how to deal with disputes, these may include thing such as the need for mediation or arbitrators.

2. Advice and Preparation of a Shareholders Agreement

At NIDO we have real life experiences in drafting Shareholders Agreements for small to medium sized businesses.


We can guide you on the requirements for such an agreement and help you with ensuring that key factors like how to deal with disputes, transfer and sale of shares in the future and how to set out the dividend policy for your business as well as how you can have different class of shares for each shareholder in the business which in turns impacts how they can have a say and how they will be taking profits out of the business.


The agreement can be drawn according to your needs and what you want it to cover but our lawyers at NIDO will provide you with options and alternatives in order to ensure that your business has this important document to protect you if you are a majority or even a minority shareholder.


Our lawyers at NIDO have extensive experience in assisting many businesses in the UK for a wide array of reasons and one of these is providing assistance with Shareholding Agreements.


We have assisted clients who have needed this service from us to outline for the company shareholders, whether it includes directors or not, as to how the business will be run and when and how they will take dividends out of the business.


In addition to the above we have assisted companies in ensuring that they have written terms on how and when a director is to be appointed and how and when sales of shares can be carried out by the shareholders, whether that is someone leaving or someone that is coming into the business as a shareholder.


We can also incorporate within such agreements the share purchase agreements and asset purchase agreements if needed.


At NIDO, our experienced lawyers can confidently assist you in dealing with your requirements should you need to have a shareholder agreement to compliment your articles of association and memorandum or association.

+44 (0) 333 300 3497

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