Do we need a Shareholder Agreement?
If you’re setting up or running a company with others, either as a joint venture, family venture or as like-minded people – it’s imperative that a shareholder agreement is drawn up as early as possible for all the shareholders or at least all the major shareholders. 
A Shareholder Agreement will:
Regulate many important aspects in your business relationships within the company – who is responsible for what, pay, holiday entitlement etc.
Detail how someone can buy or sell the shares – ensuring everything is done properly in line with that which is set out in the agreement.
This can be strengthened to include ‘Tag Along’ clauses for example to prevent one shareholder being left out of a sale of the shares by another or ‘Drag Along’ clauses to compel minor shareholders to sell when a major shareholder has a suitable offer.
A ‘Russian Roulette’ clause can be incorporated if appropriate to allow one shareholder to buy out another.
Relationships amongst the shareholders and those between the shareholders and the company are also regulated by the constitutional documents of the company.
There are a number of reasons why the shareholders may wish to supplement the constitutional documents in this way:
A company’s constitutional documents are normally available for public inspection, whereas the terms of a shareholders’ agreement, as a private law contract, are normally confidential between the parties.
Contractual arrangements are generally cheaper and less formal to form, administer, revise or terminate.
The shareholders might wish to provide for disputes to be resolved by arbitration, or in the courts of a foreign country (meaning a country other than the country in which the company is incorporated). In some countries, corporate law does not permit such dispute resolution clauses to be included in the constitutional documents.
Greater flexibility; the shareholders may anticipate that the company’s business requires regular changes to their arrangements, and it may be unwieldy to repeatedly amend the corporate constitution.
Company law provisions may not provide sufficient protection for minority shareholders, who may seek to better protect their position by using a shareholders’ agreement
To provide mechanisms for removing minority shareholders which preserve the company as a going concern
Shareholder Agreements prices in most cases are a fixed price of£750 + VAT
WANT TO KNOW MORE?
CALL BILL RYAN FOR AN INFORMAL CHAT WITH NO OBLIGATION ON 01225 582582 or 07942 959599.
