Shareholders' agreement: simple version

This is a more basic version of our other shareholders' agreements. It contains the same provisions, less those relating to enhanced protection of minority shareholders and exit.

Unless your company has minority shareholders who have loaned the company money, institutional investors such as venture capital firms or business angels, or other owners who require much stronger control rights than their shareholdings give, this document should be suitable.

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.

Despite being our simplest version, this agreement is comprehensive in the provisions that most companies will need as standard. It can be used by any company, new or existing, in any industry.

Contents

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

  • 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

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

  • how to deal with new intellectual property

  • transfers of shares: when allowed, under what conditions and to whom

  • exit strategy

  • 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

The other versions of this document have been written to provide additional provisions that give enhanced protection to minority shareholders (such as one that lends the company a large sum of money, or one that is a retired founder) and to help institutional investors such as business angels and venture capital firms sell their stakes more easily when the time requires.

You may wish to look at the agreement for a new company, or the agreement for an existing company. The differences between the two are slight.

Draftsman

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

UK-CPsha09 - Shareholders' agreement: simple version (Suitable for use in: England & Wales and Scotland)

 
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