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Shareholder Agreement Solicitors in Farnham

A shareholders’ agreement is a legal contract that outlines the rights, obligations, and responsibilities of shareholders in a company.

The agreement sets out the rules governing the relationship between the shareholders, their respective share ownership, and the management of the company.

The document can cover various aspects of the company, such as the decision-making process, transfer of shares, valuation of shares, dispute resolution mechanisms, and exit strategies for shareholders.

A shareholders’ agreement can be entered into between all or some of the shareholders in a company and is designed to protect the interests of the shareholders and provide a framework for the efficient operation of the business.

To protect the interests of your company and ensure optimal productivity, you may want to consider having a shareholders’ agreement made, if you do not already have one.

BakerLaw's corporate law solicitors have experience in drafting bespoke shareholders’ agreements and we will work with your other professional advisors to ensure the best level of protection for you and your business. We are also able to advise shareholders on their existing rights under a corporation’s shareholders’ agreement.

Our corporate law solicitors can advise on matters including:

  • Drafting shareholders’ agreements
  • Reviewing and amending existing shareholders’ agreements
  • Creating a cross option agreement

If you would like to learn more, please do not hesitate to contact our corporate and commercial solicitors in Farnham on  01252 733770 or by email enquiries@baker-law.co.uk.

Our expertise with shareholders’ agreements and cross option agreements

Drafting shareholders’ agreements

A good shareholders’ agreement is a bespoke document that has been tailored to meet the particular requirements of the shareholders.

It will usually cover matters requiring high majority or unanimous consent, rights to appoint a director, permitted transfers to agreed third parties, e.g. a family trust or group company, pre-emption on the issue of new shares or the transfer of existing shares, keyman insurance for the company’s benefit, good/bad leaver and deadlock provisions.

Our shareholders’ agreement lawyers have experience in drafting bespoke shareholders’ agreements, that will protect the best interests of your company.

Reviewing and amending existing shareholders’ agreements

Although a shareholders’ agreement provides a strong basis for a business, it should not be set in stone. As the needs of your company and shareholders evolve over time, it may become necessary to review and revise the existing agreement.

Our services include providing guidance on the process of amending a shareholders’ agreement and helping shareholders to reach a consensus on any necessary changes. Subsequently, we can prepare an updated shareholders’ agreement that formalises the changes.

Creating a cross option agreement

Prudent business owner/managers should consider entering into a cross option agreement with their fellow shareholders to protect against difficulties resulting from the untimely death of a shareholder.

The agreement refers to the shareholder’s life policy, which is held on trust for the other shareholders. In the event of the death of a shareholder, the agreement enables the deceased shareholder’s estate to sell his/her shares to the surviving shareholders using the proceeds of the life policy.

The agreement should also include a periodic policy review mechanism to ensure that the cover reflects the company’s share valuation.

Our shareholder agreement lawyers have experience in drafting cross option agreements, and we will work with your other professional advisors to ensure the best level of protection for you and your families.

Shareholders’ agreements explained

Can I write my own shareholders’ agreement?

Yes, it is possible to draft your own shareholders’ agreement. However, it is crucial to note that shareholders’ agreements are legal contracts and must be carefully drafted to ensure they are enforceable.

If you are considering drafting your own shareholders’ agreement, it is recommended that you seek professional legal advice. A specialist shareholder agreement lawyer can help you understand the legal requirements, ensure the agreement covers all necessary provisions, and avoid any potential legal pitfalls.

In addition, professional legal advice can help ensure that the shareholders’ agreement is tailored to meet the specific needs and circumstances of your business and shareholders. This can help prevent potential disputes and issues down the line.

Is a shareholders’ agreement legally binding?

A shareholders’ agreement is a legally binding contract between the parties who have signed it.

The agreement is enforceable under contract law and can be used to resolve disputes and protect the rights and interests of the shareholders.

To ensure that a shareholders’ agreement is legally binding, it must be drafted correctly and signed by all parties.

It is advisable to seek professional legal advice when drafting and negotiating a shareholders’ agreement to ensure that it is legally valid, enforceable, and tailored to the specific needs of the company and its shareholders.

What are the benefits of having a shareholders’ agreement?

There are several benefits of having a shareholders’ agreement, including:

  • Clear guidelines: A shareholders’ agreement provides clear guidelines and expectations for the company's shareholders. It outlines the rights, obligations, and responsibilities of each shareholder, thereby minimizing the risk of misunderstandings, disputes, and conflicts.
  • Customisation: A shareholders’ agreement can be tailored to meet the specific needs and circumstances of the company and its shareholders. It can cover various aspects of the business, such as decision-making, share ownership, dispute resolution, and exit strategies for shareholders.
  • Protection of shareholder interests: A shareholders’ agreement can be used to protect the interests of the shareholders. For instance, it can include instructions on how to handle shareholder disputes or how to buy out a shareholder who wishes to sell their shares.
  • Confidentiality: A shareholders’ agreement can include instructions to maintain the confidentiality of sensitive business information and trade secrets, helping to protect the company's interests and reputation.
  • Flexibility: A shareholders’ agreement can be amended or updated as necessary, allowing it to adapt to changing circumstances and needs.

In summary, a shareholders’ agreement can provide a framework for the efficient operation of a company while protecting the interests of the shareholders and minimising the risk of disputes and conflicts.

Do directors need to approve a shareholders’ agreement?

Directors do not need to approve a shareholders’ agreement, as it is a contract between the shareholders of a company. However, the terms of the shareholders’ agreement may affect the management and operations of the company, and it is important that the directors are aware of its contents.

The directors have a fiduciary duty to act in the best interests of the company and its shareholders. Therefore, they may need to consider the terms of the shareholders’ agreement when making decisions that may affect the shareholders or their rights.

In addition, if the shareholders’ agreement contains provisions that affect the powers or responsibilities of the directors, they may need to be consulted or give their consent before the agreement is finalized.

Overall, while the directors do not need to approve a shareholders’ agreement, it is important that they are aware of its contents and consider its implications when making decisions that may affect the company or its shareholders.

Our shareholders’ agreement legal fees

At BakerLaw, we aim to make our pricing fair and transparent, so our clients can get expert advice while being confident they are getting real value.

Where possible, we will act on a fixed fee basis, which will give you complete certainty over the costs involved.

Where you need ongoing support, we will typically charge a fixed hourly rate. In such cases, all work will be agreed in advance, so you always stay in control of the costs.

Find out more about our pricing.

Contact our shareholder agreement solicitors in Farnham, Surrey

If you would like to learn more, please do not hesitate to contact our corporate and commercial team on 01252 733770 or by email enquiries@baker-law.co.uk.