What is a Shareholder Agreement?

A shareholders’ agreement is a contract between the shareholders of a company which regulates the working relationship between the shareholders. Having a shareholders’ agreement in place not only provides clarity in terms of the rights and obligations of all parties, but also sets out the process for resolving any disagreements or fallouts between shareholders.

Where Rotheras can help with Shareholder Agreements

Every company is different, and likewise it is important that your shareholders’ agreement is tailored to your business and how it operates. This is where instructing a commercial solicitor can be extremely beneficial.

By having a shareholders’ agreement in place, you can:

• force a compulsory transfer of shares, for example, if an employee or director (who is also a shareholder) resigns from the company;
• reduce disputes about the value of shares where there is a compulsory transfer of shares;
• enhance the powers of minority shareholders;
• more easily remove a director who is not performing;
• restrict the activities of shareholders;
• offer flexibility to create options over shares; and
• Include a dispute resolution clause, these are specifically useful where there are two 50/50 joint owners.

It can be particularly advantageous to have a shareholders’ agreement in place if:

• you are setting up a new company or setting a company up with others;
• you are buying a business with others in a new company;
• you are acquiring shares in an existing trading company; or
• you are selling/transferring shares to others in your company whilst retaining a shareholding.

Why use Rotheras for your shareholders’ agreement?

We can review any existing shareholders’ agreement you might have, or work with you to draft a new shareholders’ agreement.

We have significant experience in drafting shareholders’ agreements and act for companies of varying sizes.

A shareholders’ agreement is usually best drafted near the start of a business venture. Trying to come to an agreement when there are issues in the relationship between the shareholders is often too late.

If you do not currently have a shareholders’ agreement in place and a dispute has already arisen, our specialist commercial litigation team who work closely with our company commercial team can help you reach a resolution.

We can advise you on a range of clauses that can be included in your shareholders’ agreement.

We can also advise you on how estate planning can factor in to your shareholders’ agreement.

Where appropriate we can review your articles of association to ensure they complement your shareholders agreement and to check whether amending your articles of association would be more suitable in your shareholders agreement.