Shareholders Agreement
Shareholders’ agreements provide clarity which will assist your business to maximise its potential through each phase of your business plan. Our corporate solicitors are experts in preparing the right bespoke shareholders’ agreement and related articles/cross-option agreements to protect your business investment properly. Opal Legal is a Top 200 UK Law Firm.
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.
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.
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.
Why Work With Our Corporate Lawyers?
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We have been ranked as a Top Tier law firm by the Legal 500 for the last seven years.
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You will receive city-quality corporate law advice at regional prices.
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Price transparency - we provide our clients with an estimate at the outset of any piece of work with ongoing updates throughout the matter.
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Our 5 Corporate Partner led service ensures you receive the very best legal advice and commercially minded support.
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We have a large team with experience across a diverse variety of sectors, focused on achieving your objectives and hitting your deadlines.
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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.
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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.
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We were the winners of ‘Corporate Team of the Year 2021’ at the Manchester Legal Awards.
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Take a look at the Opal Legal Promise for further benefits of working with us here.
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
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The proposed nature and scope of the business
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How the company is going to be run and how decisions will be made
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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))
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The rights and accountability obligations of shareholders
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How many future funding contributions will be made
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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)
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Circumstances under which a shareholders’ shares may be sold or the company wound up.
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The appointment and removal of directors
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Key roles and responsibilities
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Dispute resolution procedures (including procedures to be used to break a deadlock such as Expert Mediation, Mexican Stand-offs and Russian Roulette procedures )
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Minority shareholder protections
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The retention of profits and payment of dividends
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Non-competition obligations and restrictions
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What happens if a shareholder leaves the company (for example, on retirement or death)
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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
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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.
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