Shareholder agreements

As a shareholder in a company, you are usually investing money. You therefore want to know how the business will be run, what things you will have any say on, how you sell your shares and at what price.

If you don’t have a shareholders’ agreement then the rules that will apply will be as set out in the company’s articles of association and the Companies Act 2006 (as amended). For example, relying on the constitution and legislation will not give you compulsory transfer provisions or restrictions on what the board can do. You might also want to stop a shareholder from competing or poaching customers and staff once they have left the business.

We have expert knowledge on corporate governance issues and shareholder agreements.

Prevention is better than cure

If you hold 50% of the shares in a company you could find yourself in a stalemate situation as there is no majority vote. With no shareholders’ agreement or bespoke articles, you could find yourself stuck with another owner of the business who is not pulling their weight properly. In this case, it can be extremely difficult to get them out.

What happens if a shareholder dies or becomes critically ill? You may not want to work with their beneficiary if the shares are left under a Will. How do you finance buying out a shareholder in these circumstances?

We are often asked to:

amend or create articles of association for companies;
issue and allot shares and prepare any necessary shareholder and board resolutions;
advise on different classes of shares and amend the articles to reflect different rights;
draft or review and negotiate shareholder agreements;
draft cross-option agreements to apply in the event of death and/or critical illness.

Why choose Furley Page for advice about Shareholder agreements

We have expert knowledge on corporate governance issues including the Model Articles, old Table A and often act as a company secretary. We analyse what you need and have attention to detail that gets what you want on paper. It is important to think about the issues at the outset so that expectations are clear.

Putting in place a shareholders agreement is prudent and can be done cost-effectively. Disputes later on can prove costly – prevention is better than cure.