Shareholders' Agreements

Do you need a Shareholders’ Agreement?

If your company has more than one shareholder, we usually recommend having a shareholders’ agreement and constitution in place. It provides a binding framework around the respective rights and responsibilities of the shareholders.

A well drafted shareholders’ agreement reduces the risk of future misunderstanding and ensures clarity for all parties on important matters, like exit strategy, conduct and company funding.

What’s in a shareholders’ agreement?

Shareholders’ agreements typically include:

• How directors are appointed and removed.
• What actions must be completed with the authorisation of a high percentage of shareholders (such as changing the nature of the business, approving major transactions, senior hires, borrowing or lending money, or significant capital expenditure).
• How the company should be funded.
• How the shares are to be valued, the procedure around the transfer of shares, and how shares will be valued when sold.
• The requirements in relation to the company to hold insurances over the lives of the directors.
• Any restraints on a party who has sold their shares in the company.
• Obligations to sell or buy back shares if an employee leaves the company.
• The process if a shareholder doesn’t perform their obligations to the company, and how these disputes will be resolved.

A robust shareholders’ agreement enables you to address potentially significant issues before they arise. Our expert commercial team brings real-world, practical experience to drafting, interpreting and enforcing shareholders’ agreements, constitutions, and general company administration.

Contact us to discuss how we can help.