What is a shareholder agreement?
A shareholder agreement is an agreement put in place between the shareholders of a company. Depending on the specific nature of its contents, a shareholder agreement can also go by the name of an “investment agreement”; a “subscription agreement” or a “joint venture agreement”. What all of these agreements have in common is that they regulate the relationship between the shareholders (and typically the directors) of a company.
What is typically included in a shareholder agreement?
Key areas a shareholder agreement typically covers include: –
- The business of the company
- Shareholder dividend policies
- The day to day running of the company
- Appointment and removal of directors
- What happens if the shareholders fall out
- Restrictive covenants placed on shareholders
- Borrowing money
- To whom shareholders can transfer their shares (and to whom they cannot)
- Issuing new shares
But company law rules say what I can and cannot do in relation to my company don’t they?
The answer to that is yes, if you do not have a shareholders agreement.
But, by having a shareholders agreement in place you can override or adjust the position of the company law rules. For example, if you are a minority shareholder in a company, company law rules say that you only have limited rights and powers of control in relation to your company. Whereas, a shareholder agreement can be drafted to give minority shareholders greater protection than company law rules provide on their own.
Likewise, if you are a majority shareholder, you may want to place more onerous obligations and restrictions on a minority shareholder than that provided by company law rules alone.
Documents required for shareholder agreements
The types of documents that are required to implement shareholder arrangements include:
- Shareholder agreement (or investment agreement; subscription agreement or joint venture agreement)
- Articles of association
- Board minutes
- Shareholder resolutions
- Companies House forms
Timings and the cost of a shareholder agreement
Once you have an idea of the points and issues you want to include in a shareholder agreement, the shareholders agreement itself (together with the supporting documentation to implement the arrangements) can be produced in a few days. Timing can be affected by any points and issues that need to be negotiated between the shareholders.
How to make a shareholders agreement
Please call to speak with one of our specialist corporate lawyers today, on 0116 254 8871. We are proactive and flexible and will be able to answer any initial questions you have over the phone and arrange for a meeting as a priority.
The corporate lawyers at Bray & Bray are based at our head office in Leicester, but are always happy to arrange to meet at one of our other office locations within Leicestershire. Contact us with any questions you may have or call your nearest office to arrange an appointment.
Speak to a corporate law solicitor
Leicester call us on 0116 254 8871.
Hinckley call us on 01455 639 900.
Market Harborough call us on 01858 467 181.