Shareholders' agreement: existing company

This document provides for the legal and management issues that established companies face.

It helps you to protect your rights against other shareholders and directors, prevents disputes, and clarifies the separate roles of stakeholders within the business.

Suitable for use in: England & Wales and Scotland
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About this document

A shareholders agreement is an essential document to have in place. It takes over where company law stops - confirming the rights of the shareholders against one another and against other stakeholders in the business (particularly directors). It sets out how the shareholders intend the company should be operated.

This document has been written for the owners of a company that is already trading and that require a new agreement perhaps because of the introduction of a new shareholder or the departure of a former one, or perhaps because the business has grown in a different way to how it was envisaged when a previous agreement was in place.

It is suitable for companies of all sizes and in all industries, and where all or some shareholders are also directors.

Contents

No other shareholders’ agreements for sale on the Internet are so comprehensive in their cover of legal issues, and the drafting explanations and tips supplied. In many areas, we give you complete alternative paragraphs and explain in the notes when each will be the most suitable for you.

We have added extra provisions for cases where they may be required, for example, for a situation where one or more minority shareholders wishes to exert a level of influence that is more than could be expected from the weight of its shareholding. These are clear and can easily be edited or removed without affecting the remainder of the document.

Examples of these provisions are:

  • obligations of the company to the shareholders (the company is also a party to the agreement)

  • how shareholders will maintain their rights if they are not present at meetings

  • roles of directors and actions by the company or a director that require shareholders’ consent: controls and redistributes power between shareholders so that majority shareholders cannot force decisions

  • new shareholder rights and restrictions: even if he is a trustee in bankruptcy

  • special protection of a minority by specification of critical decisions that must be agreed by that shareholder

  • facility for a minority shareholder to appoint his or her own nominated director who cannot be removed by the others

  • how to deal with new intellectual property

  • transfers of shares and rights of pre-emption or first refusal: when allowed, under what conditions and to whom

  • exit strategy: including drag-along and tag-along rights

  • key man insurance

  • publicity about the deal

  • confidentiality

  • use of a shareholders own assets in the business

  • different valuation methodologies for the shares on the departure of a shareholder

Other versions

We also offer a version of this agreement for a newly incorporated company.

If the company does not have an outside investor, you may prefer to use this simpler alternative agreement that does not contain provisions specified above for such shareholders.

Draftsman

This document was written by a solicitor for Net Lawman. It complies with current English law.

UK-CPsha02 - Shareholders' agreement: existing company (Suitable for use in: England & Wales and Scotland)

 
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