shareholders agreements and shareholders contracts

Net Lawman company documents have been amended to comply with the Companies Act 2006.

See complete example of Shareholders agreement (new or existing company).

About these documents:
These agreements are suitable for any type of trade or business. Any shareholder or prospective shareholder may propose a shareholders' agreement and offer one of these template legal documents as a draft.

Shareholders' agreements are about setting the ground rules for the relationship between shareholders. Mostly that means protecting the interests of one or more shareholders against the others. Yes, the directors operate a company and make the decisions. But the directors operate only in accordance with the instructions of the shareholders to whom they are accountable. Furthermore, to the extent that shareholders are also directors, they are bound to the terms of an agreement they have signed as a shareholder.

All but the short form agreement include provision for valuation of the shares of a departing shareholder by reference to a valuation based on your instructions to an accountant. The valuation depends on the parameters used, so your instructions are critical. We have provided a comprehensive version which you can edit according to the deal you wish to strike with a selling shareholder.

The additional warranties are available if you need them. The warranties are similar to those you would find in a business sale agreement. The purpose of warranties to make sure that a lender or new shareholder gets what he expects. Those selling know everything about the business. A buyer or lender knows nothing except what he is told. Warranties act to level the playing field. The warranties as drawn are given by both the Company and the “other” shareholders. They therefore represent a very powerful weapon for the Lender. 

You should be aware there are alternative ways of providing the business structure for joint venture operations:

• where two partners are involved in a major project, it may be more appropriate to form a new company and operate under a joint venture agreement.
• a limited liability partnership may be more suitable in certain circumstances.
• a limited partnership, rare though it is, is a simple structure which may reduce risk.

Would you like to go to our page of free information on shareholders' agreements?

• comprehensive templates - delete what you do not need;
• define actions where shareholder consent is required;
• limit the freedom of executive director or majority shareholders;
• use of plain English.

• subscriptions for shares (new companies only);
• who shall be directors;
• company's obligations;
• actions for which shareholder consent is required
• new intellectual property;
• alternative end games / exit scenarios;
• transfer of shares and right of pre-emption with full procedure;
• matters following transfer;
• transfers of shares on death;
• conflict with the articles;
• provision for mediation;
• other legal points.