Shareholder Agreements

Legal Advice for Start-ups.

Case Study.

Luke Evetts of Evetts Legal Ltd., explains the importance of Shareholder Agreements.

All companies will have Articles of Association which set out the general rules about how the company is to be run. However, if a company has more than one shareholder, I would always recommend a shareholder agreement.

A shareholders’ agreement is simply an agreement between the shareholders of a company. A well drafted Shareholder Agreement protects the shareholders’ investment in the company and sets out practical rules relating to the company and the relationship between the shareholders.

A Shareholder Areement would typically set out:

•  The shareholders’ rights and obligations;

•  Describe how the company is going to be run;

•  Rules balancing the rights of minority and majority shareholders;

•  Rules about how important decisions are to be made (including the sale of shares).

Shareholder disputes can be very expensive to resolve and have a significant negative impact on a company. In my experience, the negative impact is even more severe when dealing with shareholders who are family members or close friends who have fallen out. We can’t stop people from falling out, but we can make sure the agreements are in place to minimize the impact of shareholder disputes on the company and reduce the risk of legal action and associated costs.

Trusted Xperts Partner Lawyers will endeavour to support you and your business through the development of a long-term relationship. They will focus on the individual needs of each legal matter, drawing together the right mix of expertise to ensure you create a framework fit for purpose. A Shareholder Agreement will prove indispensible as your business evolves.

Furthermore, when it matters most however, you can rely on the expertise and commercial experience, to represent and defend your business against litigation action. Selecting the right law firm in such circumstances can literally mean the survival or closure of your business. It's important therefore to understand why being very thorough at an early stage of your businesses development - can avoid significant problems further down the road, whether that be from employment, contractual or professional indeminity disputes for example.

Also, we think that professional advice should automatically include a 360◦ view of your affairs and or business, so that growth and opportunities can be generated more easily. Our Trusted Xperts Partner Law Firms take a proactive approach to integrating a full picture in conjunction with other Trusted Xperts Partners.

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