Our Shareholders’ Agreement Service

Shareholders’ agreements, related company articles of association and (in the case of individual shareholders) cross-option agreements are essential to regulate both majority and minority shareholders’ investments and shareholder relationships, business plans, responsibilities and obligations.

For most shareholders, establishing and promoting their business to maximise operational profit and later a capital investment return when they sell their shares are their main goals.

A shareholder agreement sets out the roles, responsibilities and obligations of each shareholder (whether they are a majority or minority shareholder) and their agreement on how the company will operate through each stage of the shareholders’ business plan.

This is essential as without a shareholders’ agreement, neither majority nor minority shareholders have legal duties or obligations to a company or its business (and limited rights). A shareholder agreement will set out the contractual shareholder terms and conditions by which shareholders, the company and (where appropriate) its directors will be bound.

A shareholder agreement provides focus and clarity to all shareholders. With a shareholders’ agreement in place, all parties will better understand their rights and obligations and how the business plan will be executed.

Some of these will be shareholder obligations as to how they must act or behave in connection with their monetary investment, time involvement and operation of the business, and others will be restrictions on what the shareholders and/or the company can or cannot do without appropriate shareholder approvals.

A company goes through many changes during its life cycle, which can put a lot of pressure on shareholder relationships. It is not uncommon for shareholders to disagree on matters (sometimes causing a deadlock) or fall out completely.

Shareholders Agreement

Shareholder disputes tend to be more severe and difficult to resolve without a shareholder agreement. A shareholders’ agreement will reduce the likelihood of a disagreement or deadlock occurring, and where one does occur, it will set out the correct rules and processes to follow to resolve the shareholder disagreement or shareholder deadlock.

Where a shareholder dispute arises under a shareholder agreement, our Dispute Resolution team (who have specialist shareholder dispute resolution lawyers) can assist you in resolving a dispute.

We are experts at preparing shareholders’ agreements at different stages of a company’s life cycle, such as when a company start-up is established, as part of an equity investment round, at the time of an MBO or MBI or following the exit of one or more shareholders.
When a shareholders’ agreement is signed, new articles of association should be adopted simultaneously to implement arrangements in a shareholder agreement.

A company’s articles of association are a public document (filed at Companies House), so some of the more personal or specific terms (such as post-termination restrictions) are better suited to the shareholders’ agreement, which will remain private and confidential between the parties.

A cross-option agreement (incorporating put options and call options over shares) is needed when individual shareholders take out life and/or critical illness policies to cover the value of their shareholding interest in a company. The proceeds of such a policy are normally written into trust so that they can be used by surviving shareholders to buy a deceased shareholder’s shares.

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Our Approach to Shareholders Agreements

We provide a creative and can-do shareholders’ agreement advisory service. We guide you on the legal and commercial arrangements you need to consider for your shareholders’ agreement, and then we prepare and finalise the completion of your shareholder agreement, new articles of association and (if appropriate) cross-option agreement.

When necessary, we draw on the expertise of our Commercial Property, Employment, Commercial, Dispute Resolution and Private Client teams.

We provide clear advice to ensure you understand the complete process and efficiently prepare a shareholders’ agreement, new articles and association and (if appropriate) a cross option, each tailored to your specific needs.

We will provide clear and transparent costs quoted at the outset and undertake all work for you according to our Promise.

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Why Work With Our Corporate Lawyers?

  • We have been ranked as a Top Tier law firm by the Legal 500 for the last seven years.
  • You will receive city-quality corporate law advice at regional prices.
  • Price transparency - we provide our clients with an estimate at the outset of any piece of work with ongoing updates throughout the matter.
  • Our 5 Corporate Partner led service ensures you receive the very best legal advice and commercially minded support.
  • We have a large team with experience across a diverse variety of sectors, focused on achieving your objectives and hitting your deadlines.
  • We are a full-service law firm operating from a one-site office, which means our teams communicate effectively and efficiently and our Corporate Lawyers can draw on support from other specialist lawyers such as property and employment lawyers.
  • Our Corporate Solicitors use the latest technology to ensure that we are working as efficiently as possible and that geographical distance is no bar to us from providing you excellent client service.
  • We were the winners of ‘Corporate Team of the Year 2021’ at the Manchester Legal Awards.
  • Take a look at the Myerson Promise for further benefits of working with us here.

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Preparing Shareholder Documentation

Our specialist Corporate Solicitors will prepare a suite of shareholder documents, including your shareholders’ agreement, new articles of association, a cross-option agreement (if appropriate) and directors’ service contracts.

Each of these shareholder documents needs to complement the others, ensuring that you have continuity and consistent and clear terms.

We will help you to carefully consider all relevant points (using our Shareholders’ Agreement Questionnaire & Checklist as a starting point), including the following for inclusion in a shareholders’ agreement and related articles of association/cross option agreements/directors’ service agreements:

  • The proposed nature and scope of the business
  • How the company is going to be run and how decisions will be made
  • Drag and tag along provisions (by which a certain number of shareholders who have agreed to an exit can force the remaining shareholders to also follow in the exit, and minority shareholders are given the right to tag along with an exit proposed by the majority shareholder(s))
  • The rights and accountability obligations of shareholders
  • How many future funding contributions will be made
  • The procedure for the issue and transfer of shares, including pre-emption rights (giving other shareholders the first right of refusal if a shareholder wishes to sell shares)
  • Circumstances under which a shareholders’ shares may be sold or the company wound up.
  • The appointment and removal of directors
  • Key roles and responsibilities
  • Dispute resolution procedures (including procedures to be used to break a deadlock such as Expert Mediation, Mexican Stand-offs and Russian Roulette procedures )
  • Minority shareholder protections
  • The retention of profits and payment of dividends
  • Non-competition obligations and restrictions
  • What happens if a shareholder leaves the company (for example, on retirement or death)
  • Remedies for breach of the agreement (for example, deemed or compulsory transfer notices for shares) and appropriate good/bad leaver provisions concerning the valuation of shares
  • Indemnities between shareholders and apportionment of liability about personal guarantees

If you do not have a shareholders’ agreement and a dispute has already arisen, we have a specialist Dispute Resolution Team who, together with our Corporate Team, can assist you in resolving the matter.

Preparing Shareholder Documentation

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What is a Shareholders’ Agreement?

A shareholders’ agreement is an agreement between all the shareholders of a company.

It is an essential and integral document to any shareholder relationship, which allows shareholders to regulate their relationship with each other, the company and its directors.

It provides clarity and direction for all by setting out the framework for how the company will be governed and operated. It also helps to mitigate costly and potentially damaging shareholder disputes, should they arise in the future.

Whilst a company’s standard constitution and the Companies Act 2006 provide some protection for shareholders, it is very limited, and relying on it alone could have a random or unpredictable outcome.

Similarly, Table A of the Companies Act 1985 and the Model Articles within the Companies Act 2006 import default provisions; however, not all of these provisions will be suitable and compatible with the owners’ wishes.

For example, standard articles do not permit a compulsory transfer of shares held by a shareholder if such shareholder breaches a shareholders’ agreement or the articles of association.

Who Should Enter into a Shareholders’ Agreement?

The circumstances in which you may need to consider a shareholders’ agreement with your fellow shareholders are:

  • If your company has two or more shareholders;
  • If you are setting up a new company or starting a new business with others;
  • If you are buying a company with others in a new company, whether as part of an MBI, MBO or otherwise.
  • If you are acquiring or subscribing for shares as an investment in an existing private trading company (whether new shares or from another shareholder); or
  • If you are selling or transferring shares to others in your company whilst retaining a shareholding.
  • A shareholders’ agreement will ensure that your investment, interest and, where appropriate, control of your business is protected, and the business can be run transparently and profitably.

Whilst a company’s standard constitution and the Companies Act 2006 provide some protection for shareholders, it is very limited, and relying on it alone could have a random or unpredictable outcome. Similarly, Table A of the Companies Act 1985 and the Model Articles within the Companies Act 2006 import default provisions; however, not all of these provisions will be suitable or compatible with the owners’ wishes.

Even if you have already established your business, there is still time to put the necessary protections in place to ensure that shareholders are protected in the future. You can look to enter into a suitable shareholders’ agreement and articles of association at any time.

It is also important to review such arrangements regularly (especially when shareholdings are varied) to ensure they remain suitable.

What Kind of Scenarios Does a Shareholders’ Agreement Regulate?

Below are several scenario questions that can be easily addressed and answered in a shareholders’ agreement. These scenarios would potentially cause major concern and disruption to you and your business without a shareholders’ agreement.

  • What happens if a shareholder wishes to sell their shares to a third party whom you do not know or trust or to someone who wishes to change the direction of your business?
  • What happens if most shareholders wish to sell their shares, but a minority shareholder does not?
  • What happens if the shareholders fall out or have a disagreement?
  • What happens if a shareholder dies?
  • What happens if a shareholder wishes to set up a competing business?
  • Do you want a veto on certain decisions if you do not have day-to-day involvement in your company?

A shareholders’ agreement will provide clarity and direction for all by setting out the framework for how your company will be governed and operated and how issues or disputes such as these may be resolved.

What are Articles of Association or a Company’s “Articles”

A company’s articles of association or ‘articles’ are its constitution that regulates its internal affairs and its relationship with its officers and shareholders

Articles should be carefully prepared to reflect all provisions of a shareholders agreement, share subscription agreement and investment agreement regarding how a company will be operated.

All UK companies have articles that are publicly accessible at the Registrar of Companies. 

Articles take one of three forms:

  1. Model Articles;
  2. Model Articles modified as desired; or
  3. Bespoke Articles.

Model articles are the default statutory articles in the Companies Act 2006. They import limited default provisions such as shareholder liability, director appointments and proceedings, share rights, and shareholder decisions. In most cases where there are two or more shareholders, they will not be suitable.

Articles should normally be extended beyond the limited default Model Articles by either amending the Model Articles or adopting bespoke Articles.


Meet Our Specialists

Home-grown or recruited from national, regional or City firms. Our specialists are experts in their fields and respected by their peers.

Mohammed Akeel Latif

Mohammed Akeel Latif

Akeel is a Partner and Head of the Corporate Team

Carla Murray

Carla Murray

Carla is a Partner and Head of our Commercial Team

Scott Sands

Scott Sands

Scott is a Partner in our Corporate Team

Andrew Brown

Andrew Brown

Andrew is a Partner in our Corporate and Commercial Teams

Chris Moss

Chris Moss

Chris is a Partner in our Corporate and Commercial Teams

Terry Moore

Terry Moore

Terry is a Partner in our Corporate Team

Ryan Fletcher

Ryan Fletcher

Ryan is a Senior Associate in our Corporate Team

Olivia Sturgess

Olivia Sturgess

Olivia is an Associate in our Corporate Team

Simon Nolan

Simon Nolan

Simon is an Associate in our Corporate Team

Luke Wilkins

Luke Wilkins

Luke is a Solicitor in our Corporate Team

Thomas Lees

Thomas Lees

Thomas is a Trainee Solicitor in our Dispute Resolution Team

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