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  • Home
  • Who We Are
    • Meet The Team

      Get to know each member of the fds team a little better
    • Our Journey

      The fds story so far...
  • What We Do
    • Business Development and Succession Planning

      Including selling and buying a business, raising finance including via crowdfunding, company valuations, EOTs and more
    • Board Support Services

      Including non-executive director support, mentoring and coaching, board reviews and more
    • Training Services

      We offer bespoke director-level training, online workshops and keynote, conference and seminar speaking
    • General Business Services and Support

      Including shareholder agreement reviews, shareholder disputes, director resources and contracts
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Shareholder Agreements

When we go into business with someone the last thing on our minds is 'what will we do if we have a fallout or worse?'. Just for a moment imagine what you would do if the unthinkable happened.

A shareholder’s agreement allows you to imagine the worst and put plans in place to deal with it. It is likely to be more amicable doing this at a time where you are negotiating as friends, rather than as enemies on either side of the negotiation table.

Shareholders’ agreements vary enormously depending on the country of origin and your particular business, but many joint venture or business startup shareholder agreements would normally be expected to address the following:

  • Regulating the ownership and voting rights of the shares in the company
  • Control and management of the company
  • Making provision for the resolution of any future disputes between shareholders
  • Protecting the competitive interests of the company
  • The nature and amount of initial contribution (whether capital contribution or other) to the company
  • The proposed nature of the business
  • How any future capital contributions or financing arrangements are to be made
  • The governing law of the shareholders' agreement
  • Ethical practices or environmental practices
  • Allocation of key roles or responsibilities
  • What happens to the shares if someone dies, leaves voluntarily or is forced to go
  • What is a good and a bad leaver
  • How do we value shares
  • What happens if you face a deadlock if you can’t agree what to do
  • What if one party wants to sell and the other doesn't
  • What happens if one party gets divorced
  • And so much more!

As you can tell from the above list, the resolution of these matters in the early stages of a business can go a long way to mitigating the potential problems in the future. As we deal with businesses like yours on a daily basis we know what can go wrong and how pre-planning can help to ensure things go right.

Therefore, we can help with the preparation of a new shareholders agreement or, if yours isn’t quite functioning as it should, we can review it for you, recommend changes and help negotiate these with your colleagues.

We have a standard shareholder agreement template and checklist available at our online shop, that you can utilise for your individual needs. 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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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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Get in Touch

Poonam Kaur - MD

Poonam Kaur

Managing Director

poonam@wearefds.com

01924 376784

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