Shareholder Agreement Lawyers

A Shareholder Agreement is crucial for any company, providing clarity and stability in governance. At Mounteney Solicitors, our expert Shareholder Agreement Solicitors specialise in crafting these essential documents, defining shareholder responsibilities, rights and obligations.

This agreement supplements a company’s Memorandum and Articles of Association, helping establish clear ownership and management structures while addressing potential disputes. By setting clear expectations, a well-drafted Shareholder Agreement encourages investment, promotes management stability and reduces conflicts, allowing businesses to focus on growth.

Our agreements cover essential aspects such as management, investment terms and business ownership dealings, including exit strategies and shareholders’ involvement in other ventures.

While employment details are usually outside a Shareholder Agreement’s scope, Mounteney Solicitors also offers legal services for contractor contracts and employment terms to ensure comprehensive legal support on all related matters.

With a wealth of experience, we provide a professional, approachable service, ensuring your Shareholders’ Agreement meets your specific needs and lays a strong foundation for your company’s success.

A Shareholders’ Agreement is a contract that some or all shareholders in a company enter into. It regulates the management of the company, the ownership of shares, and the relationships and protections among shareholders. This agreement also outlines how the company is to be run.

Shareholders’ Agreements are often used to protect shareholders by setting guidelines for handling potential issues. They can address a variety of situations, including:

• Company financing: Establishing how the company will be funded.
• Management: Outlining how the company will be managed.
• Share transfers: Defining procedures for transferring shares.
• Dividend policy: Specifying how dividends will be distributed.
• Deadlock situations: Providing solutions for when shareholders cannot reach a decision.
• Share valuation: Determining how shares will be valued.

Shareholders’ Agreements also include provisions to prevent disagreements and offer methods for resolving disputes effectively.

It is worth noting that a Shareholders’ Agreement is not a legal requirement. However, having one in place is highly beneficial.

As well as setting out the company’s activities and how important decisions will take place, it protects the interests of minority shareholders, for instance, by giving them a veto on decisions a majority shareholder might try to push through.

Shareholders’ Agreements outline how a company is managed and how relationships between shareholders are handled. However, they can sometimes lead to conflicts or complications. Some common problem areas include:

• Directors vs members: Conflicts can arise when some shareholders are also directors whilst others are not, creating an imbalance allowing director-shareholders to influence decisions that affect all shareholders, i.e. setting salaries and bonuses, which can reduce profits available for dividends to non-director shareholders.
• Transfer of shares: Shares can be transferred accidentally (e.g. through bankruptcy or death) or intentionally (e.g. for personal reasons or financial needs). Shareholders often want to control who can acquire shares and roles within the company. However, restrictions on transfers can be problematic.
• Approving a change in business direction: As businesses evolve, it may be necessary to implement changes in products, services and/or operations. Issues can arise if there are disagreements amongst the shareholders concerning business direction. As such, the Shareholders’ Agreement should specify when member approval is needed for significant business changes to ensure all shareholders are aligned.
• Managing changes in shareholder roles: Shareholders may wish to change their involvement level in the company from being an active director to a passive investor. If the agreement does not provide clear guidelines for these transactions, company stability may not be maintained.
• Injection of debt: Loan agreements can restrict a company’s actions, such as taking on additional debt, which can give lenders, especially shareholders, considerable power; this is why it is crucial for the agreement to address how rights and roles change with large creditors and protect against preferential payments.
• Competition concerns: Shareholders providing capital could have competing interests. All agreements should protect against conflicts of interest, and this becomes even more important if shareholders are involved in competing businesses.
• Preventing competition from former shareholders: Former shareholders could also go on to establish competing businesses. Without a non-compete clause in the agreement, the company and remaining shareholders are not protected.

By addressing these common problems, Shareholders’ Agreements can help maintain clarity and prevent disputes, ensuring the smooth operation within the company. Consulting with legal professionals when drafting these agreements can protect your interests and support your business’s success.

Our work, from initial instruction to finalising the form of agreement, generally takes around 7-10 working days.

This time frame allows us to ensure all necessary details and legal requirements are thoroughly addressed, providing clients with a comprehensive and legally sound document. At Mounteney Solicitors, we prioritise efficiency and accuracy to meet our clients’ needs promptly and professionally.

Your supplier is unregulated Mounteney Legal Services Ltd, which does not charge VAT.

Our work will be charged a fixed fee of £500.

There is more about fees on our website here.

If your business requires a Shareholders’ Agreement, our Business Solicitors in Manchester are here to assist you. Our Commercial Agreements Solicitors possess an outstanding attention to detail, ensuring every aspect of your Shareholders’ Agreement is addressed with precision. We understand the nuances associated with these matters and provide bespoke solutions to meet your unique business needs.

If you are considering drafting a legible contract, we urge you to contact us today. With offices conveniently located in Bramhall, Cheadle Hazel Grove and Heald Green, We serve clients throughout the Stockport and Manchester area, including Altrincham, Poynton, Wilmslow and Sale. We also have virtual consultation options that offer the flexibility to accommodate your busy schedule.

Call us now and experience the difference our expert Solicitors in Stockport can make in protecting your business interests through a well-crafted Shareholders’ Agreement.