Companies are free to decide whether or not to put in place shareholder agreements. Those that do benefit from the clarity and certainty that comes with formally agreed arrangements.
A shareholder agreement is a private document which sets out the rights and responsibilities of company members. Terms usually deal with:
- voting rights
- the transfer of shares
- valuation of shares
- restrictions on certain board decisions
- what happens if members don’t agree
- rules about expelling members
- exit terms
- what happens on death or bankruptcy
- dispute resolution.
It is up to the company and members to agree exactly what goes into the shareholder agreements. As these negotiations will shape the relationship, it’s vital that both parties take care to deal with issues as favourably to them as possible.
Making these agreements comprehensive, helps to avoid disputes and it means that the arrangement sets off on the best possible footing with each party understanding their role and what is expected of them. For minority shareholders, these agreements can offer significant protection; terms can only be amended with agreement of all shareholders. For companies, well constructed agreements help regulate management and provide for efficient operating systems. They can also restrict shareholders’ activities once they have left.
Shareholder Agreements Solicitors
Our corporate lawyers advise companies and shareholders on their rights, obligations and on the terms of agreements. They identify the most beneficial arrangements for clients and help negotiate and formalise terms. They’re also on-hand to help resolve any issues that arise between the parties quickly and constructively.