Kaslers Solicitors LLP

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Once it has been signed, you will only ever look at a shareholder agreement again, if there are problems between the shareholders. One or more of you will be unhappy and looking to hold the others to it.

It needs to say what happens if

• One of you dies. Do the others have the right to buy in his shares or can he leave the shares under his will

• One of you wishes to get out and cash up. Can he force the others to buy? Is he allowed to sell to strangers?

• One of you is a director / employee but resigns or is sacked. What happens to the shares

• You receive an offer for the company but the buyer will only buy if he gets  100% of the shares

How will the shares be valued? How long the buyer has got to raise the money. Can he pay by installments - with or without interest? Over how long a period?

Do you want the price to depend on whether the seller is a 'good leaver' (is ill, has to retire) or a 'bad leaver' (chucked out for setting up a rival company, been found guilty of bribery / corruption)

The Agreement can set out the job roles of those shareholders who are working in the business, the banking arrangements, who can sign what cheques, how often there must be meetings of directors or shareholders if you are not talking to each other voluntarily

All this needs to be drafted with knowledge of the applicable law.

We will meet with you to explain and discuss the following matters, then prepare a draft shareholder agreement, work with you and any solicitors representing your co-directors and shareholders to finalise it.

Timescale and costs depend upon the number of people involved, but we will discuss this with you at the outset

Agenda for meeting

1. Certificate of Incorporation
2. Memorandum and Articles of Association
3. Names, addresses, contact details, dates of birth and general health situation of proposed shareholders, directors and secretary
4. Location of registered office
5. Description of business to be undertaken
6. Business plan
7. Present authorised and issued share capital
8. Proposed classes of shares, description of rights attaching to each class and with note of amounts to be authorised and issued in each class to each proposed shareholder
9. Details of any loans, overdrafts and other borrowings to be effected
10. List of triggers to give rise to rights of pre-emption
11. List of events / circumstances expressly stated not to give rise to rights of pre-emption
12. Valuation formula - discounts to be applied
13. Preferred dispute resolution procedure
14. Funding of purchase price, life policies etc
15. Reserves distribution and dividend policies
16. Job title of any member directors and details of their remuneration packages and benefits
17. Meetings policy for Board and Shareholders
18. Reporting obligations
19. Details of bankers and bank mandates, cheque signing policies
20. Professional advisers - solicitors, accountants etc
21. Likely exit route and enabling rights

Related topics you may find useful:

Companies
Shareholder disputes

Call Michael Breeze on 07900 195 195 or call 0845 270 2511 to set up an appointment