Shareholders' Agreement
Shareholders' Agreements are a necessity for the owners of any company. Because they set out the rights of one shareholder against another, both majority and minority owners will want comprehensive agreements to protect their interests and their equity (and possibly debt) investment.
Before downloading and using one of these Shareholders' Agreement templates, we suggest that you read these helpful guidance notes from Netlawman:
- What is share capital?
- Authorised share capital and the Companies Act 2006
- Company structure: using different classes of shares
- Shareholders' rights
- Why you should use a shareholders' agreement
- Shareholders' agreements: important points to consider
- Preventing conflicts between shareholders and directors using a shareholders' agreement
- Avoiding conflict between your shareholders' agreement and your articles of association
- Controlling the entry of new shareholders: right of first refusal within a shareholders' agreement
- Planning for termination and exit in your shareholders' agreement
- Share issues, dilution and pre-emption rights in a shareholders' agreement
- Drag along clauses within shareholders' agreements
- Tag along provision in a shareholders' agreement
- Cross options
- Ways of resolving deadlock between shareholders
- Alternative dispute resolution: better than going to court
Shareholders' Agreements: important points to consider:
Step 1: Decide on the issues the agreement should cover
Step 2: Identify the interests of shareholders
Step 3: Identify shareholder value
Step 4: Identify who will make decisions - shareholders or directors
Step 5: Decide how voting power of shareholders should add up
Template: Shareholders' Agreement: standard version
Read what Netlawman says about this template:
"A shareholders’ agreement is an essential document for the owners of any company. It rebalances control when there is different levels of involvement and power in day to day decisions, and protects the value and the interests of each party.
Not only should this template help you establish the strategic management structure you need to grow your business, but also ensure that your investment is protected when you or other owners decide to sell.
This template is our full standard version, suitable for most private limited companies regardless of the industry of the business or the number of shareholders. It could be put in place by a majority or a minority shareholder when the company is formed, or at any later time, for example, on change of ownership or when a significant debt investment is made or repaid.
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.
The provisions in this document are clear and can easily be edited or removed without affecting the remainder."
Template: Shareholders' Agreement: single majority owner retains control
Read what Netlawman says about this template:
"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. The document is suitable for companies of all sizes and in all industries."
Template: Shareholders' Agreement: joint venture through company
Read what Netlawman says about this template:
"This template is for a company that is the vehicle for a joint venture operated by two or more parties. The shareholders in the project could be two or more individuals or companies, whilst the venture could be any business, from a property renovation to the design and manufacture of an item that requires the specialist expertise and skills of all partners. Use for a project that has a purpose and structure over a short time scale.
This document regulates a company set up for a specific joint venture project. Although the company will be an independent legal unit, the venturers will want to know what is happening and will exert closer control than if they were mere shareholders in an associated company.
It is assumed that the venturers will be two companies, but they could as easily be three or more – individuals or any other entities."
Template: Shareholders' Agreement: professional investors
Read what Netlawman says about this template:
"This document includes terms that a professional investor such as a business angel or venture capitalist would require. It also considers the provisions of minority shareholders - likely to be the founders and early supporters. Additional terms in this document include: drag along and tag along rights, key man insurance, rights of preference, rights of first offer, and increased reporting requirements.
This agreement is:
suitable for private companies in any industry in the UK
with any number of shareholders
suitable for all stages of the business/investment life cycle, whether the investor is providing seed capital, venture capital, expansion capital or a MBO
the company could be a start-up or established."
Template: Shareholders' Agreement: property management company
Read what Netlawman says about this template:
"This template is for a company that manages a property that is split into multiple leasehold units, where the company owns (or will own) the freehold, and the shareholders are the leaseholders. It provides clear and practical routes through the contentious areas of who controls what and leaves the owners with an agreement which maximises efficient, democratic management."
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