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Shareholder agreements solicitors

At Stephensons, our experienced shareholder agreement solicitors specialise in crafting and advising on shareholder agreements tailored to meet the unique needs of businesses. Shareholder agreements are a vital component of any company's corporate governance framework, helping to safeguard the interests of stakeholders and manage potential disputes.

Our team of dedicated legal experts possesses in-depth knowledge of shareholder agreement law. We understand that these agreements play a crucial role in defining the rights and responsibilities of shareholders, which can vary significantly depending on the nature and size of the organisation.

Our expert shareholder agreements solicitors can draft and negotiate shareholder agreements for start-ups, small, medium and large businesses. Contact us today if you need a shareholder’s agreement drafted or if you need to seek legal advice over an existing shareholder agreement. We can also assist if you are involved in a shareholders dispute.

 

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What is a shareholders’ agreement?

A shareholders’ agreement is an agreement between the shareholders of a company and governs the way in which the company is run. The agreement will describe how the company should be operated and the rights, responsibilities and obligations of the shareholders.

The agreement will also regulate the relationship between the shareholders, the management of the company, ownership of shares and the protection of the shareholders.

What are the different types of shareholder agreements?

There are several types of shareholder agreements, each tailored to specific circumstances and goals. The type of shareholders agreement will depend upon the nature of the business and the objectives for the shareholders.

Most shareholder agreements should address or consider the following aspects:

  • Control and management of the business – who will have control over important business decisions
  • Dividend policies
  • Compulsory leavers
  • Shares transfers – preventing dilution
  • Good and bad leavers – seeking to avoid shareholder disputes
  • Drag and tag along provisions – thinking ahead to a sale
  • Non-compete provisions

Our team can advise you as part of the drafting work on the possible provisions and ensure the agreement is tailored to you. 

Why do I need a shareholders’ agreement?

If you are a shareholder in a company with one or more other shareholders then you should always consider whether a shareholders’ agreement is required. Shareholders’ agreements are particularly important in protecting minority shareholders. Without a shareholders’ agreement, the company will be under the control of those who own the majority of the voting rights at any meetings of the company.

What does a shareholders’ agreement provide for?

The shareholders’ agreement can provide for many eventualities, including the financing of the company, the management of the company, the dividend policy, the procedure to be followed on a transfer of shares, deadlock situations and valuation of the shares.

A shareholders’ agreement is a private document and does not need to be disclosed to any third parties or filed at Companies House. Provisions can be made in a shareholders’ agreement that the members agree to remain confidential and private.

What could happen if you don’t have a shareholders’ agreement?

In the absence of a shareholders’ agreement there is much potential for dispute and disagreement between the shareholders. In most scenarios a company will be set up by like minded individuals with a common goal; however those views can easily change over passage of time. Typical disputes centre around investment of profits, growth of the company etc. One shareholder may also wish to sell his/ her shares and the remaining shareholders may not agree with this. Shareholders’ agreements contain provisions that pre-empt such disagreements and set out appropriate ways for such disputes to be addressed, for example providing remaining shareholders with the right of first refusal on any sale or transfer of shares. Shareholders’ agreements can also provide for circumstances where shareholders act against the wishes of other shareholders and provisions for forcing the exit of defaulting shareholders.

It's crucial for shareholders to seek legal advice from our shareholder agreement lawyers when drafting a shareholders' agreement to ensure that it complies with UK law and regulations and meets the unique needs of the company and its shareholders. Additionally, the agreement should be reviewed periodically to ensure it remains relevant as the company evolves.

Can I write my own shareholder agreement?

Yes, you can write your own shareholder agreement, but it's highly advisable to consult with a solicitor experienced in commercial contract law to ensure it complies with UK regulations and adequately addresses your company's specific needs.

Who can draw up a shareholders agreement?

A solicitor experienced in commercial contract law or a legal professional with expertise in shareholder agreements can draw up a shareholders' agreement in the UK. It's advisable to seek professional legal assistance for this important document.

Who should enter into a shareholders agreement?

All shareholders of a company, including founders and investors, should enter into a shareholders' agreement to define their rights, responsibilities, and the rules governing the company. This agreement helps prevent conflicts and provides clarity on important matters, benefiting all stakeholders.

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