The role of a shareholders’ agreement
The role of a shareholders’ agreement is to establish the obligations of each shareholder, and protect their respective rights. Having a shareholders’ agreement in place reduces the risk of misunderstanding between shareholders, and ensures that the shareholders deal with important matters, like an exit strategy and company funding, at the outset of the relationship.
Our team of professional commercial lawyers will draft your constitution and shareholders’ agreement, and can also provide advice in relation to issues that may arise between shareholders.
The contents of a shareholders’ agreement
A shareholders’ agreement reduces the risks to your company when you have more than one shareholder. Shareholders’ agreements typically outline:
- 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, borrowing or lending money, or significant capital expenditure).
- How the company should be funded.
- The requirements in relation to the company to hold insurances over the lives of the directors.
- How the shares are to be valued, the procedure around the transfer of shares, and how shares will be valued when sold.
- The process if a shareholder doesn’t perform their obligations to the company, and how these disputes will be resolved.
Your shareholders’ agreement enables you to address potentially significant issues before they arise. Shareholders’ agreements are not required to be publicly available, so shareholders can keep these arrangements private.
At Davenports Harbour Lawyers, we pride ourselves on giving real-world business and legal advice about shareholders’ agreements, constitutions, and general company administration. Our commercial team are experienced in both private and public practice, so we understand how to give practical advice and cut through the jargon.