About this shareholders' agreement

A shareholders' agreement is an essential document to confirm the rights of the shareholders, one against another and against other stakeholders in the business, and to set out how the shareholders intend to operate the company. It takes over where company law stops.

There are two essential reasons for having a shareholders' agreement:

The first is to protect minority shareholders' rights and investment value. Without an agreement, majority shareholders may force issues that are not in the minority shareholders' interests and that could reduce the value of the minority shareholders' interests in the company.

The second is clarity of decision making. In circumstances where shareholders of any size are also directors, operational decisions that would ordinarily be taken by directors accountable to all shareholders or made only with the consent of all shareholders might be made instead in the interest of a single shareholder without having been brought to the attention of the others. A good shareholders' agreement should set out the decisions that must be made in the capacity of a shareholder rather than a director. Similarly, directors may feel unable to take business decisions (and act as directors) without shareholder approval.

Disputes between shareholders and other stakeholders are expensive and can be disruptive and detrimental to the on-going operation of the business. Having a clear agreement in place reduces the likelihood of disputes and makes resolving any that do occur easier. A clear and comprehensive agreement also reduces the need for subjective decision making by an arbiter or judge that can give shareholders, and particularly minority ones, so much uncertainty and worry.

This shareholders' agreement protects the interests of the minority shareholders and provides a detailed framework of freedom for working shareholder-directors.

The document additionally includes provision for valuation of the shares of a departing shareholder by reference to a valuation based on your instructions to an accountant. The valuation depends on the parameters used, so your instructions are critical. We have provided a comprehensive version which you can edit according to the deal you wish to strike with a selling shareholder.

The law in this shareholders' agreement

The law in this shareholders' agreement is based on both company law and contract law. Within the structure of company law, you can choose the terms that best suit your situation, so you do not need to study any particular law to be able to edit your shareholders' agreement. The agreement is up-to-date and very comprehensive.

When to use this shareholders' agreement

This agreement is suitable for any private company, no matter what its business. It is about rights, power, control and safeguards, not about your business.

A company's shareholders' agreement can be redrawn at any time, but is commonly done when the relationship between the shareholders and the directors changes.

For a new company, it can be put in place from Day 1, or shortly afterwards. The best time is always "now". Clarity on how decisions are made will let you sleep better at night, whether you hold a small proportion or a large majority of the shares.

All the shareholders must sign the shareholders' agreement but there are no rules about which of them must manage the process of taking the agreement through to signatures.  Any shareholder could suggest that the document is necessary and could start the discussions.

Shareholders' agreement features and contents

No other shareholders' agreements for sale on the Internet are in plain English or are so comprehensive in their cover of legal issues and the drafting explanations and tips supplied. Net Lawman's slogan "Real law, in plain English" is as true of this document as of any others.

In many areas, we give you complete alternative paragraphs and explain in the notes when each will be the most suitable for you.

This document contains over twenty commercial paragraphs as well as what you might call technical legal provisions. You can choose which are suitable for your needs. Many are based on our practical experience as solicitors of dealing with shareholder disputes. Examples of these provisions are:

• obligations of the company to the shareholders (the company is also a party to the agreement);
• how shareholders will maintain their rights if they are not present at meetings;
• roles of directors and actions by the company or a director which require shareholders' consent: controls and redistributes power between shareholders so that majority shareholders cannot force decisions;
• new shareholder rights and restrictions: even if he is a trustee in bankruptcy;
• how to deal with new intellectual property;
• transfers of shares and rights of pre-emption: when allowed, under what conditions and to whom;
• exit strategy: the hidden bomb if neglected;
• key man insurance;
• publicity about the deal;
• confidentiality;
• use of a shareholders own assets in the business;

Other versions of this shareholders agreement

We have six versions of this shareholders agreement with only small differences, making choice easy. All are designed for a private company in any business with any number of shareholders, some of whom will be directors. All assume that some shareholders will work in the company, but that is not essential.

This one is for a new company. Other versions are for existing companies and for companies where there has been a major debt investment, possibly by a minority shareholder

Shareholders agreement: new company with shareholder directors and a major lender

Shareholders agreement: existing company with shareholder directors and debt financing

Shareholders agreement: existing company with shareholder directors and a major lender

Reasons to buy from Net Lawman

Full money back guarantee – buy with confidence
This shareholders agreement template comes with a no questions asked full money back guarantee. You take no risk that it might not be right. Once you buy it, we'll give you 30 days to evaluate it in any way you want. If for any reason you're not happy, just e-mail us and we'll refund your money in full immediately.

Guidance notes included - prior legal knowledge is not required
Comprehensive guidance notes, written by Net Lawman, are included. These notes ensure that you don't need to be a lawyer or have knowledge of the law to understand which paragraphs you should edit to complete the template correctly.

Minimal editing required
This document has been written specifically in such a way that you don't need to spend hours editing it. It uses an approach where you remove the sections that aren't applicable to you, so you don't have to add any back, write your own, or worry about whether you are using correct legal language.

Paragraphs have been written to stand alone from each other. Removing one that isn't applicable to your circumstances doesn't affect the standing of any other in the agreement.

Plain language minimises future disagreements
Like all Net Lawman documents, your shareholders agreement is real law written in plain language that all parties will understand. This will minimise the likelihood of later disputes.

If a dispute does arise and you find yourself in court, the judge will look more favourably on a legal agreement written in plain language over one peppered with complicated legal jargon. Your case will be stronger if it is clear that all sides understood the agreement when it was signed.

Delivered straight to your inbox
As soon as you complete the secure checkout process, we will send your shareholders agreement template straight to your inbox. We will also keep a copy for you for 60 days in our customer area so you can access it even when you are away from your e-mail.

Still unsure whether this is the right document for you?
If you are unsure whether this agreement is suitable for your particular circumstances, then you have two options. The first is to buy now, evaluate it, and use the 30 day, full money back guarantee to obtain a refund if it isn't suitable. You take no risk in seeing the agreement. The second option is to contact us using the link below and ask. We can't offer you legal advice on your situation, but we can help you find the document you want. We aim to respond to your question within 24 hours.