Are you a shareholder in distress? Has the relationship between you and your shareholders changed?

Jo Haigh shares what to do if you want to end your relationship with your shareholders or how to resolve issues to move forward with the company in the best possible way.

What should you do if you no longer get on with your shareholder? The relationship between shareholders is like that of a family, there are bound to be fallouts. If you have taken our advice and have got a shareholder agreement in place, there will be set processes to deal with that.

What happens if one of you wants to leave because you can no longer tolerate it, or you’re too old, or just simply want to retire? If you haven’t got a shareholder agreement in place, then it comes down to a negotiation. This is a very painful process and will feel exactly like a divorce.

It is interesting that it is ultimately the small things that matter to the individuals and the bigger picture seems to go out of the window. I cannot tell you enough how important it is to have a pre-agreed process in place to deal with shareholder disputes. All disputes can be resolved but, sometimes, it needs a divorce to do this.

If you would like further information on the services we offer in regards to shareholder disputes please click here.

Is it important to have a shareholders agreement? (video)

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Do you have a shareholders agreement in place? Are you aware what the benefits of a shareholders agreement are?

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Shareholders Agreement: Checklist & Standard Template

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A shareholder agreement deals with two very distinct areas:

1. What power do the shareholders wish to retain themselves i.e. not delegate to the directors?
2. How shareholders will deal with their own shareholding

Shareholder agreements are unlike Articles of Association, which are the rules laid down by the shareholders as to how they will allow directors to run their business. Articles of Association are also in the public domain at Companies House and bind all directors and shareholders.

The shareholders agreement is a private document and only binds those parties that sign it (unless you have something called a Deed of Adherence).

Shareholder agreements are essential in times of shareholder upset, they can save time, money and upset, as they lay out clearly how shareholder issues will be dealt with.

Sadly, these “prenuptial type documents” are not often put in place before the shareholders approach the divorce court, yet with foresight and good planning, such documents can be put in place to ensure the shareholders avoid expensive and distracting costs and time by providing contractual processes for disputes.

Whilst we are comfortable with this template, you may like to take legal advice before completion to assist with any local nuances related to your specific position.

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