Shareholders Agreement

The Shareholders Agreement is a document that regulates the relationship between shareholders in a company.  There are three main instances where you will require a Shareholders Agreement and they are as follows:

• Quasi Partnerships Agreements - these are mainly used in owner managed businesses where the shareholders and directors tend to be the same people and they detail the relationship between the shareholders as though it was a partnership. The main provisions people wish to highlight is what would happen to a shareholder on the death of another shareholder and to ensure that if there are any life assurance policies payable then the deceased shareholders widow/widower receives the benefit of such monies.

• Investment Agreements - are used when a business person invests in one or more Private Limited Companies and becomes a shareholder. The Investment Agreement would make sure that there are relevant terms to protect the investor's share, such as minority protection rights, the ability to receive financial information, dividends and an exit strategy. 

• Joint Ventures - When two companies have an idea for a new business they may wish to conduct that new business through a separate new company for which each of their companies will be a shareholder. A Joint Venture Agreement will detail the relationship between the two parties stating the roles and responsibilities that will be required of each company during the joint venture and details of any financial rewards to each of the shareholding companies.  A typical example would be one of the companies may bring the property and the other company may bring a work force and know-how.

For information on general or bespoke Shareholders Agreements, please contact Shahid Azam, shahid.azam@clough-willis.co.uk